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Toys R Us in pension talks to help stave off collapse

Toys R Us in pension talks to help stave off collapse

Under its CVA plans, Toys R Us has proposed to close at least 26 loss-making United Kingdom stores, a move that could see 800 jobs lost.

The PPF changed its stance after Toys R Us agreed to pay 9.8 million pounds ($13.1 million) into the pension plan - 3.8 million pounds in 2018 and 6 million pounds in 2019 and 2020.

The vote saw 98% of Toys R Us creditors backing the arrangement.

The fund is a major creditor and has threatened to vote against plans by Toys R Us in Britain to close 26 stores with the loss of at least 500 jobs next spring if it does not agree to a payment of £9 million towards the deficit in its United Kingdom pension scheme.

Advisers for the chain and the Pension Protection Fund, the industry lifeboat for failed companies, are locked in negotiations before a creditor meeting today on a restructuring.

Alvarez & Marsal is expected to handle Toys R Us's administration if further talks with the PPF fail, Sky News learns.

It sought the CVA to achieve this but it needed the support of 75% of creditors, including landlords and the PPF.

However, PPF head of team Malcolm Weir confirmed that "an agreement has now been reached and we will now be voting in favour of the proposals at the CVA meeting today".

The retailer's staff pension scheme has a deficit of more than £25m, and the PPF rejected the company's earlier offer to inject £9m, throwing into doubt whether a rescue plan could be enacted.

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The biggest threat appeared to come from the Pension Protection Fund which wanted commitments to protect current and future pensioners.

It is understood that Toys R Us did not have enough cash to meet the PPF's demands and could not call on its U.S. parent company for support while it was in bankruptcy protection.

"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".

The stores earmarked for closure will, however, remain open as normal through Christmas and into the new year.

As part of the CVA proposal, a number of stores - at least 26 - have been identified for closure.

The effort to overhaul its United Kingdom estate follows the filing by Toys "R" Us's American parent for Chapter 11 bankruptcy protection in September.

Toys R Us employs 3,200 staff in total in the UK.

Toys R Us UK is also thought to have made losses in seven out of the last eight years.


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