Toys R Us UK closure may be imminent

Toys R Us in the UK is struggling to get support for the company’s restructure plan, with the retailer on the brink of administration.

Immediate problems are arising for Toys R Us, one of the UK’s biggest LEGO stockists. The government’s Pension Protection Fund (PPF) is withholding support for the restructure plan that would see Toys R Us continue to trade through Christmas, and begin closing stores in the Spring of 2018. Around 3,200 jobs are at risk.

The Guardian reports that there is a pension deficit of over £18.4 million, so the PPF requires Toys R Us to put money into the pension fund:

The PPF, the industry-funded, state-backed safety net, demanded that the troubled retailer pump about £9m into the ailing Toys R Us UK pension fund.

This is in order to gain the PPF’s support for the retailer’s planned company voluntary arrangement (CVA) procedure, which involves the closure of at least 26 loss-making stores. That deal would lead to the loss of up to 800 jobs.

The insolvency procedure automatically pushes Toys R Us’s pension fund into assessment by the PPF, giving it a key vote at the meeting and the potential to block the process.

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It could be as soon as this weekend that Toys R Us falls into administration, as reportedly the company is not able to put the required £9 million into the pension fund.

The also-struggling US Toys R Us is not able to provide any support:

The group’s US parent is also unable to lend its UK subsidiary the cash under the terms of its court-led bankruptcy protection. The parent company filed for Chapter 11, the US version of administration, in September after running up $5bn (£3.7bn) of debts.

The PPF is seeking to reassure employees that all pensions accrued by Toys R Us employees are protected.

Graham

Graham is the Editor of BrickFanatics.com, with plenty of experience working on LEGO related projects. He has contributed to various websites and publications on topics including niche hobbies, the toy industry and education. If you would like to get involved with Brick Fanatics, as a builder, writer or photographer – then please contact Graham at graham@brickfanatics.com.

Graham

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