Toys R Us at Risk of Administration – Pension Protection Fund States it has Voted Against Recuse Plan

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If you have Toys R Us gift vouchers, gift cards or credits notes – spend them NOW. Not online but in-store on goods you can take away immediately (not on mail order items, not pre-orders).

There is a very real risk that the UK branches of the retailer will go into administration by the end of this week.

Those that have made use of the company’s Take Time To Pay lay-away scheme should try and pay off any remaining balance and take the goods with you immediately.

If Toys R Us does go into administration then it is almost certain that any money put on gift cards, vouchers, credit notes or saved in the Take Time To Play lay-away scheme will be lost forever.

Uncollected Click & Collect orders should also be picked up in the next or two, at least to avoid any potential chaotic queues and delays if the company is heading for liquidation.

While I hope Toys R Us stays in business for the sake of its employees, the Company Voluntary Arrangement (CVA) survival plan that has been put forward by the company needs a super majority of 75% approval by Thursday from its creditors. Toys R Us’s creditors include product suppliers, landlords and the Pension Protection Fund (PPF). The PPF or pension lifeboat as it is also referred to is a body put in place to protect the pension schemes so that the employees that paid money into it to will receive the benefits promised on enrollment, it has been reported that it has a 20% share of the vote. The PPF wanted £9 million from Toys R Us to help reduce the already existing pension deficit of around £30 million. Toys R Us is unwilling to pay what is a relatively small sum money when compared to an over £580 million loan to a holding company in the British Virgin Islands that has recently been waived. Toys R Us claims that it is unable to pay the money while its parent company is undergoing bankruptcy protection in the USA. The PPF has already confirmed that it has voted against the CVA proposal.

Toys R Us is hoping that creditor will approve its plan for a CVA, however, in recent years such CVAs have failed to keep major retailers, such as BHS and JJB Sports from eventually being liquidated.

Even if the CVA proposal is narrowly approved, which will need almost every supplier and landlord to vote for it, there will still be at least 26 stores closing down, however, more stores could be shut down.