Fears over Toys R Us pension black hole
REGULATORS are monitoring retail chain Toys R Us amid fears its pension deficit could be jettisoned into the Pension Protection Fund.
The concerns arose following the revelation that the British arm of the US-owned group has launched an emergency sale process and is being circled by restructuring firms.
Sources said it needs to settle a ‘multi-million pound’ bill by the end of the month or face administration.
Fears for the chain – which has 2,500 staff – have been heightened just weeks after it reached an agreement with creditors over a plan to settle debts and shutter loss-making stores to keep trading.
Documents seen by The Mail on Sunday show it had debts at the time of £239 million. That included a £74.3 million pension deficit as calculated by the Pension Protection Fund which is likely to have to pick up the pieces if the company fails.
Other key debtors included Lego and Hasbro, both owed more than £5 million, and Mattel which was owed £3.5 million.
The immediate funding requirement for the pension fund is understood to be around £30 million, a bill which would ultimately have to be footed by pension savers via pension funds that plug holes in schemes run by failed companies.
Restructuring firms eyeing Toys R Us include Hilco, but rescuers may not volunteer to support the pension fund.
Toys R Us is understood to have plugged £1.1 million into the pension scheme last month as part of a promise to contribute £10 million a year.
Pensions expert John Ralfe said: ‘A company in extreme difficulties sometimes gets better after a restructuring, but most times it gets worse.
‘The question is whether the pension scheme will be better off now than it was then when arguably it would have had more cash. The Pension Protection Fund does not want to be seen to be the trigger, but was it too accommodating with Toys R Us before Christmas?’