Toys R Us may go bust as early as tomorrow

‘If they can do this who is next?’

Britain’s biggest toy chain could go bust as early as tomorrow – putting 3,200 people out of work just days before christmas.

toys r Us, which has 105 stores across the country – including 11 in scotland – is struggling to compete in the face of an onslaught from online rivals including amazon.

the retailer now faces going into administration after a pensions regulator yesterday said it will block a rescue plan unless the company makes a £9million payment into its retirement fund.

toys r Us, which racked up losses of £673 million last year, insists it cannot afford to make the payment. it comes after it emerged that former boss roger Mclaughlan saw his pay almost quadruple to £1.3 million in January 2016 from £356,000 in 2014. the Pension Protection Fund, the pensions lifeboat for failing companies, said toys r Us must agree to the payment or it will not vote in favour of its plans for a so-called company Voluntary arrangement.

this would allow it to close around a quarter of its stores and deliver millions of pounds in savings, giving it a chance of survival. But if the deal is rejected the firm will be plunged into administration.

retail consultant richard Hyman said it was a ‘catch-22 situation’, adding: ‘We may see a bit of a first here – the PPF puts a business out of business in order to protect its current and past employees.’ toys r Us is thought to be prepared for its demise, with administrators alvarez & Marsal said to be waiting to manage a possible collapse.

it previously admitted that there is a £18.4million black hole in its pension scheme – but it is feared the deficit could have grown to £30 million.

the PPF was criticised for its handling of the closure of department store BHs last year, which put the pensions of 19,000 at risk. Mr Hyman said that the PPF was now being more proactive in securing a safety net for employees at toys r Us in response.

Former pensions minister sir steve Webb said: ‘it is important that the PPF tries to drive a hard bargain ... if toys r Us walks away and is allowed to walk away then who is next?’

Malcolm Weir of the PPF said: ‘We remain in dialogue with the company and their advisers and we are able to amend our vote if suitable assurances are provided.’

last night both Mr Mclaughlan and toys r Us declined to comment.