THE future of Toys R Us appears doubtful after the Pensions Protection Fund has said that it will vote against the retailer’s rescue plan which could see it fall into administration before Christmas.
The UK’s pension lifeboat has given the retailer until Thursday to fill the £9 million pension fund shortfall before it will cast it’s final decision.
The troubled kids store now faces the loss of 3,200 jobs, after already announcing plans to close 26 stores, with 800 jobs at risk.
If bosses fail to strike a deal with the PPF, the American chain, which employs 3,200 people in the UK, could go under.
Malcolm Weir, the PPF’s director of restructuring and insolvency, said: “We can confirm that the PPF has today submitted its proxy vote on the proposed Toys R Us CVA [company voluntary agreement] by the required deadline.
“We have indicated we intend to vote against the proposals. Since the company lodged the CVA proposals we have spent significant time and effort, with the help of PwC, assessing the current and future financial position of the company to ensure the pension scheme would not be weakened by the CVA, leading to an even bigger claim on the PPF and its levy payers further down the line.
YOUR SHOPPING RIGHTS
WHILE Toys R US is not expected to close all it’s stores, you may be worried about it going bust. Here’s how to protect yourself:
- Take Time To Pay. This is the toy store’s reserve now, pay later scheme where you can pay for your order over up to 12 weeks. Now’s the time to cash in those payments and pick up the toys or risk losing out if the company does go bust.
- Pay by credit card if spending over £100. Purchases over £100 and under £30,000 are protected under Section 75 of the Consumer Credit Act if an item fails to turn up or goes bust.
- Pay by debit card. Some banks will refund customers under the ChargeBack scheme, although it’s at their discretion.
- PayPal. If you pay via PayPal then you may be covered by its Buyer Protection policy.
- Gift gards. If you have a giftcard to use, then spend it as soon as possible. When firms go bust they often stop accepting them.
“Given the position of the company, we strongly believe seeking assurances for the pension scheme is reasonable given the deficit in the scheme and questions about the overall position of the company.”
But it wasn’t all damning as he indicated that the PPF could still change their mind if the retailer adds to the pension pot in time.
“We remain in dialogue with the company and their advisors and we are able to amend our vote if suitable assurances are provided,” Malcolm added.
Which Toys R Us stores are closing?
As the toy giant sets to close a quarter of its stores, these are the shops that will shut down by Spring 2018:
- Belfast Newtownabbey
- Birmingham St. Andrews
- Derry City
- East Kilbride
- Old Kent Road
- Tunbridge Wells
- Manchester Central Retail Park – already earmarked for closure pre CVA decision
A CVA is an insolvency procedure which will enable Toys R Us to pay off its debts in order to continue trading, but the retailer needs 75 per cent of creditors to approve it.
The PPF and others have until midday today to cast their vote ahead of a meeting on Thursday.