Toys R Us fears mount amid £9 million pension standoff

Fears are mounting over the future of embattled retailer Toys R Us amid a standoff over demands for the chain to pay £9 million into its pension fund ahead of a crunch vote on rescue plans.

Britain’s pension lifeboat — the Pension Protection Fund (PPF) — is demanding that Toys R Us makes the payment to secure three years’ worth of funding upfront for its defined salary staff pension scheme, which has a shortfall of between £25m and £30m.

It is understood the PPF will not back the retailer’s planned restructuring unless Toys R Us agrees to pay up the £9m within two months, with a midday deadline looming large for proxy votes to be lodged ahead of tomorrow’s creditors’ meeting.

But Toys R Us is not believed to have enough cash to meet the PPF demands.

The PPF’s vote will determine whether the rescue plans go ahead, and there are concerns that if the company voluntary agreement (CVA) fails, Toys R Us could collapse into administration, putting 3,200 at risk.

Toys R Us needs the backing of 75% of creditors, including landlords, for the CVA to go through.

Under the plans, Toys R Us is proposing to close at least 26 loss-making UK stores, putting up to 800 jobs at risk, while landlords will also take significant rent cuts. Under the plans the chain’s Kirkcaldy store would close and the Dundee shop reduce in size.

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

Malcolm Weir, director of restructuring and insolvency at the PPF, said: “We continue to work closely with the trustees of the Toys R Us pension scheme and externally appointed advisers given the current CVA proposals.

“We have yet to decide how the creditor rights will be exercised in the CVA vote.”