Workers at the Ipswich-branch Toys R Us breathe a sigh of relief
Workers at the Ipswich-branch of Toys R Us were able to breathe a sigh of relief yesterday after the troubled retail chain agreed a deal with its creditors.
A crucial agreement was reached with the pensions safety net scheme shortly before a vote on proposals to save the toy seller, avoiding the loss of 3,200 jobs and the closure of all its UK stores.
The Pension Protection Fund (PPF) had been set to vote against a Company Voluntary Arrangement (CVA), which would have forced the UK arm of Toys R Us into administration, unless the retailer paid £9million towards a £25m to £30m pensions shortfall.
The US-owned firm, whose parent company has filed for bankruptcy protection in America, was believed to be unable to meet that demand but has managed to reach an agreement to pay a larger sum over the next three years.
Malcolm Weir, the PPF’s director of restructuring and insolvency, said: “This offer goes a long way to addressing the PPF’s concerns and in de-risking the pension scheme, offering greater protection for the current and retired members in the pension scheme.”
In total, Toys R Us has agreed to pay £9.8m into the pension plan, made up of £3.8m in 2018, with a further £6m promised over 2019 and 2020.
Other creditors include the firm’s landlords who face rent cuts as part of the restructuring and, while the CVA will allow Toys R Us to stay afloat, at least 26 loss-making UK stores will still shut, with the loss of up to 800 jobs.
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A number of other under-performing stores need to secure a rent reduction of at least 35% within seven months or face closure although the Ipswich branch, on the edge of the town by the A12-A14 interchange at Copdock, has been named among the company’s top-performing stores, making its future as secure as it can be under the circumstances.
Steve Knights, managing director 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.”
Toys R Us has said trading has suffered as its warehouse-style stores are “too big and expensive to run”, while it has also struggled with online competition.