The British unit of Toys R Us has avoided falling into administration after creditors agreed to back an injection of £9.8 million into the company’s pension fund.
Toys R Us agreed to pay £3.8 million into the fund next year, with a further £6m paid over 2019 and 2020.
The Pension Protection Fund (PPF), dedicated to supporting retirement funds in the UK that run into trouble, is the retailer’s biggest creditor.
However, the pension lifeboat said it would block Toys R Us’s attempt to trade under a company voluntary arrangement (CVA) – allowing the firm to pay creditors over a fixed period – unless it secured acceptable commitments from the retailer.
The PPF said after the meeting: “The company has agreed to pay £9.8m into the pension plan, composed of £3.8m in 2018, with a further £6m promised over 2019 and 2020.
“The deal also sees the pension deficit recovery plan shortened to ten years, while the company has undertaken to seek additional support from the US parent company for the new plan for the pension scheme.
“Furthermore the trustees will have greater powers if any of the above conditions are not met.”
Steve Knights, managing director of Toys R Us UK, was quoted by the BBC as saying:
“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.
“All of our stores across the UK will remain open for business as normal until spring 2018. Customers can continue to shop online and there will be no changes to our returns policies or gift cards across this period.”
The toy retailer recently confirmed that it plans to shut “at least” 26 of its UK stores.