In a letter to all suppliers, Toymaster buying group head Roger Dyson has explained the situation - at least offering positive news about payment of bills and an orderly wind-down if necessary.
"Toymaster has been working closely with the management of TM Kingdom Ltd since December 2004, when TM Kingdom Ltd first experienced cash flow and financing problems, in an endeavour to enable the company to continue to trade in its existing format," said Dyson.
"Despite vigorous cost saving measures and branch closures, the difficult trading conditions coupled with increasing costs make the possibility of TM Kingdom Ltd trading profitably in the near future highly unlikely, leaving the directors with no alternative but to place TM Kingdom Ltd into administration."
It is hoped that the management of Toymaster, working in conjunction with the administrators KPMG LLP and the management at TM Kingdom, can organise the sale of the business and in the event that a sale of the business is not possible an orderly wind down of the company, minimising any negative impact on our industry as a whole.
"We will all be doing our best to find purchasers for the many profitable stores which are currently operated by TM Kingdom Ltd," Dyson continued.
Toymaster Ltd will continue to pay suppliers all undisputed TM Kingdom Ltd invoices for goods invoiced through Toymaster Ltd, in the normal way, as and when they become due for payment.
Although Toymaster Ltd will experience some financial loss due to the administration of TM Kingdom Ltd, it is hoped that by continuing to trade the stores, while organising an orderly wind down, the loss can be minimised.
Toymaster Ltd has an accrual against the projected loss that should ensure that Toymaster’s long term financial stability is not in question and any impact on our balance sheet should be minimal.
"That Toymaster Ltd has been able to withstand the administration of its two largest members in less than a year, negating any financial loss to our suppliers, while continuing to provide an undiminished service to our members, is the continuing proof of the value of buying groups to our industry," added Dyson.