Business in last ditch talks to escape administration

Blog Insolvency

Retail giant Toys R Us is locked in eleventh hour talks in hope that it may yet manage to avoid its UK arm falling into administration.

The business’ hopes have been pinned on a crunch vote later today (Thursday) which will determine whether it can press ahead with a major restructure.

The Pension Protection Fund (PPF) – which wants the business to put an additional £9million into its ailing pension scheme – has previously signalled that it will vote against the rescue plan.

In the past couple of days, Toys R Us has been fighting to reach a compromise which will both satisfy the regulator and enable it to initiate a rescue plan.

This will involve the business entering into a Company Voluntary Arrangement (CVA), under which it will agree to the closure of 26 loss-making stores.

While this would put around 800 jobs in jeopardy, the chain argues that administration would place all 105 stores in grave danger and could potentially mean that the entire workforce (3,200 people nationwide) could find themselves out of work.

Toys R’Us was founded in the United States in the 1950s and arrived in the UK more than 30 years ago, originally opening five stores.

In the decades since, the subsidiary has grown to more than 100 outlets, with flagship premises in Bristol and the Brent Cross Shopping Centre, London.

More recently it has claimed that its stores, often located on the outskirts of towns, are proving expensive to run. It has also had to contend with increasing competition from a growing number of online toy sellers.