Retailer Toys R Us reportedly facing administration if it fails to pay £15m tax bill
PUBLISHED: 16:50 27 February 2018 | UPDATED: 16:50 27 February 2018
It is understood administrator Moorfields is waiting in the wings as the toy seller attempts to find a buyer before hitting the payment deadline on a hefty VAT bill.
Toys R Us, which employs around 3,200 staff in the UK including sites in Norwich and Ipswich, is understood to have struggled with cash flow pressures after sales were squeezed by worse-than-expected trading over the crucial Christmas period.
READ: More doubt cast over future of Toys R Us
It comes after the beleaguered firm announced a Company Voluntary Arrangement (CVA) at the end of last year in an attempt to shore up its financial position by allowing it to shut loss-making stores and secure deep discounts on rental costs.
The restructuring plan won the approval of 98% of creditors in December, and had the backing of the Pension Protection Fund (PPF).
The move would see at least 26 loss-making UK stores shut and spark the loss of up to 800 jobs.
The PPF had earlier refused to back the retailer’s plans, but concessions from the company, including an offer to reduce its deficit recovery plan to 10 years from 15 years, meant the deal received its blessing.
While both the Ipswich and Norwich stores were spared the axe under the CVA plans the Norfolk site would have to renegotiate its rent or downsize within seven months.
In total, Toys R Us has agreed to pay £9.8m into the pension plan, made up of £3.8m in 2018 and £6m over 2019 and 2020.
Moorfields declined to comment.