Toys R Us saved
Creditors rally with 98% voting in favour of CVA following PPF compromise
The UK arm of Toys R Us has been saved by a last minute payment plan with the Pension Protection Fund.
The PPF had demanded a £9m cash injection to protect the pensions of the toy retailer's workers in order for the company to receive its vote for to proceed with restructuring plans.
But a compromise deal saw the PPF lend its weight to voting, which saw 98 per cent of creditors greenlight the company voluntary arrangment.
Despite asking for £9m, which is around the same amount it would normally pump into its pensions scheme over the next three years, the PPF will instead receive only £2.2m up front and £1.6m in October 2018. Toys R Us will follow that up with further payments totalling £6m in 2019 and 2020.
With the compromise in place, the upshot is Toys R Us can now proceed with its CVA, narrowly avoiding slipping into administration. It will continue to trade into the new year and save three quarters of its stores and more than 2,000 jobs. The retailer will still go ahead with shutting down 26 stores and axe around 800 jobs from spring.
Steve Knights, MD of Toys R Us UK, said: "The vote in favour of the CVA represents strong support for our business plan and provides us with the platform we need to transform our business so that we can better serve our customers today and long into the future."