Toys R Us on brink with over 3,000 jobs at risk

CHILDREN’S retailer Toys R Us was last night on the brink of collapse – putting thousands of jobs at risk just a week before Christmas.

The troubled company, which has faced an onslaught from online rivals such as Amazon, is struggling to raise the £9million it needs to secure its future.

The crisis could see the closure of 105 stores and the loss of 3,200 jobs.

Industry experts last night said the timing was awful for employees, adding the high street should be prepared for even bigger job losses next year as shoppers flock to the internet.

Sources said the chain has had its hands tied by the Pension Protection Fund (PPF), the UK’s pension lifeboat for failed companies, which is demanding the £9million payment which Toys R Us cannot afford.

The PPF said Toys R Us must agree to the payment, which is equivalent to four years’ employer pension contributions, or it will refuse to vote in favour of a process called a Company Voluntary Agreement. The CVA would allow Toys R Us to close 26 of its 105 stores and deliver millions of pounds in savings – giving it a chance of survival.

But Toys R Us must secure the approval of its creditors, landlords and the PPF at a meeting on Thursday to trigger the CVA.

Malcolm Weir, director of restructuring and insolvency at the PPF, said: ‘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.’

Toys R Us has come under further scrutiny after it emerged it wrote off a £548.5million loan to a subsidiary based in the British Virgin Islands.

A letter sent to MPs by trustees of the company’s pension scheme revealed it was completely in the dark over the loan. Labour MP Frank Field, chairman of the Work and Pensions Committee, compared the incident to the collapse of Sir Philip Green’s department store chain BHS last year which led to 11,000 job losses.

‘Already underfunded’