Toys R Us has been saved from collapse after creditors supported a rescue deal that will keep three quarters of its stores open.
The Pension Protection Fund (PPF) had initially threatened to block the company’s plan in a move that could have forced the country’s biggest toy chain into administration just ahead of Christmas – placing 3,200 jobs at risk.
But, following a series of talks, the PPF said it had secured acceptable commitments from Toys R Us that enabled it to support the so-called Company Voluntary Arrangement (CVA).
Sky News had reported exclusively on the ebbs and flows in the negotiations in the days and hours ahead of the meeting – with the result on a knife-edge until the announcement.
The firm had said early this month that it wanted to shut 26 stores – a quarter of its UK total – with the loss of hundreds of jobs, under a plan to save substantial costs and modernise its business model.
It sought the CVA to achieve this but it needed the support of 75% of creditors, including landlords and the PPF.
The body, known as the pensions lifeboat and which held a 20% weighting in the vote, said it had now got a deal that went a long way to meeting its initial fund shortfall concerns.
It said after the meeting: “The company has agreed to pay £9.8m into the pension plan, composed of £3.8m in 2018, with a further £6m promised over 2019 and 2020.
“The deal also sees the pension deficit recovery plan shortened to ten years, while the company has undertaken to seek additional support from the US parent company for the new plan for the pension scheme.
“Furthermore the trustees will have greater powers if any of the above conditions are not met.”
The CVA achieved 98% support.
Steve Knights, the UK managing director of Toys R Us UK, said: “We are pleased to have secured the support of our creditors and will be working closely with them in the months ahead.
“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.”
“All of our stores across the UK will remain open for business as normal until Spring 2018.
“Customers can continue to shop online and there will be no changes to our returns policies or gift cards across this period.
“As part of the CVA proposal, a number of stores have been identified for closure. Consultations with employees will commence in the New Year.”