Toys R Us has 24 hours to secure the future of its retail operations in the UK as the PPF demands £9m to be paid into its UK pension scheme.
The payment is necessary for the ailing retailer to win its backing for a restructuring that could trigger the closure of dozens of British shops.
Sky News reports that the Pension Protection Fund and the scheme’s trustees want the sum – equivalent to four years of employers’ contributions, along with related levy payments – to be agreed within 24 hours.
The demand could determine the future of Toys R Us in Britain, with the deadline for a vote on a company voluntary arrangement (CVA) – a legally binding agreement which enables the restructuring of finances and operations – looming on Tuesday.
Under the CVA plan, at least 26 of the chain’s shops will close, with landlords agreeing to substantial rent reductions at many of the remaining outlets, saving millions of pounds a year.
Without the PPF’s support, the CVA is likely to fail at a meeting of creditors on Thursday, which could cast into doubt the viability of the toy retailer’s loss-making UK business.
At least 500 jobs would face the axe if the CVA is voted through, but a failure to do so could cast doubt on the future of the remaining 2,700 staff at the company.
The £9m up-front contribution is being demanded by the PPF amid concerns that the scheme could run into trouble again in several years’ time.