Insolvency looms for Toys R Us with £9m pension shortfall
Toys R Us, which sells toys and games across 84 stores around the country, could collapse as it struggles to gain support from the Pension Protection Fund (PPF), a state-backed vehicle that bails out pension funds that are in the red.
This week, the PPF demanded Toys R Us pump around £9 million into its ailing pension in order to avoid employees losing out in order for the state-backed organisation to support the retailer’s planned voluntary arrangement (CVA) procedure. Other parts of this plan include closing at least 26 loss-making stores and shedding up to 800 jobs.
Accounts filed by the retail chain at Companies House show a £18.4 million hole in its pension fund, up from a £10.25 million shortfall a year before, however, with many fearing that pensioners will be left at risk without significantly more cash injected.
If the CVA does not go ahead, it has been reported that it is likely Toys R Us would fall into administration, risking the closure of all of its 84 permanent stores and 20 pop-up locations, putting 3,200 staff at risk of redundancy.
Malcolm Weir, director of restructuring and insolvency at the PPF, said the body had yet to decide how to vote: ‘‘We are seeking to fully understand the current position of the company, including its future potential, position of the US parent and the reported historic financial transactions.
“The pension scheme is already underfunded and, if we were to vote in favour of the CVA, we would need actions taken that ensure the position of the pension scheme was not going to further weaken.
“Whatever the outcome of the CVA, the pension scheme members can be reassured that they remain protected.”
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