Thousands of Toys R Us jobs in UK plunged into doubt over pension scheme

Pension Protection Fund announces that it intends to vote against the beleaguered company’s proposed rescue plan

In September, the toy company filed for bankruptcy protection in the US, in what experts at the time described as one of the largest ever Chapter 11 filings by a speciality retailer (Getty)

Thousands of workers at Toys R Us stores across the UK face an uncertain future, after the Pension Protection Fund (PPF) announced that it intends to vote against the company’s proposed rescue plan.

Earlier this month, Toys R Us said that it plans to close at least 26 stores across the UK in the new year, in response to the changing retail environment.

It said at the time that it would be instigating a so-called “Company Voluntary Arrangement”, under which it will seek creditor approval to shut outlets in order to save costs. The deadline for that vote is on Thursday.

On Tuesday, Malcolm Weir, director of restructuring and insolvency at the PPF, said that the organisation intends to vote against the proposals. The PPF is one of Toys R Us’s biggest creditors.

“Since the company lodged the CVA proposals, we have spent significant time and effort, with the help of PwC, assessing the current and future financial position of the company to ensure the pension scheme would not be weakened by the CVA, leading to an even bigger claim on the PPF and its levy payers further down the line,” he said.

“Given the position of the company, we strongly believe seeking assurances for the pension scheme is reasonable given the deficit in the scheme and questions about the overall position of the company.”

But he said that the PFF remains “in dialogue” with the company and with Toys R Us advisors, and that the PFF would be able to amend its vote if suitable assurances are provided.

Toys R Us currently employs around 3,200 people across the UK. If the group fails to agree a deal with the PFF, it could plunge it into administration, putting all of those roles at risk.

But the PFF could propose an alternate restructuring plan, effectively buying Toys R Us more time.

In September, Toys R Us filed for bankruptcy protection in the US, in what experts at the time described as one of the largest ever Chapter 11 filings by a speciality retailer.

Its UK unit has also been battling tough market conditions and declining sales for some time. While its smaller shops and online store have held up, the bigger, warehouse-style outlets have suffered, especially as a result of the emergence of online behemoths like Amazon.

When it announced its planned store closure, it assured investors and customers that there would be no disruption for shoppers through the Christmas and New Year period.