Advertisement

  1. ITV Report

Toys R Us staves off collapse after reaching deal with creditor

Administrators waiting in the wings for Toys R Us Credit: PA

Beleaguered retailer Toys R Us has staved off the threat of administration after a key creditor agreed to a restructuring plan that will secure about 2,500 jobs.

With the backing of the Pension Protection Fund (PPF) obtained, a proposal for a company voluntary arrangement (CVA) was "overwhelmingly" approved, the company confirmed.

Up until the deal was secured, the fate of all 3,200 Toys R Us jobs were hanging in the balance, with administrators waiting in the wings.

Commenting on the CVA vote, Steve Knights, managing director of Toys R Us UK, said: "We are pleased to have secured the support of our creditors and will be working closely with them in the months ahead."

But while the CVA will allow Toys R Us to stay afloat, at least 26 loss-making stores are due to close eventually, meaning up to 800 jobs could still be lost.

All of Toys R Us' UK stores will remain "open for business as normal", however, until spring 2018, Mr Knights said.

Toys R Us trades from 84 stores in the UK Credit: PA

The PPF had earlier refused to back the retailer's rescue plans, but concessions from the company - including an offer to reduce its deficit recovery plan to 10 years from 15 - meant the deal received the PPF's blessing.

In total, Toys R Us has agreed to pay £9.8 million into the pension plan, made up of £3.8 million in 2018, with a further £6 million promised over 2019 and 2020.

Other creditors include the firm's landlords, who will have to stomach rent cuts as part of the restructuring deal.

The retailer, which is owned by US-based Toys R Us Inc, trades from 84 stores in the UK and has 21 concessions.

Toys R Us has said that trading has suffered as its warehouse-style stores, opened in the 1980s and 1990s, have proved "too big and expensive to run", while it has also struggled to keep up with online competitors.

The announcement comes just months after the US-based retailer filed for bankruptcy protection in the US and Canada.