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Toys R Us agrees rescue plan with creditors

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Toys R Us has staved off collapse after creditors backed a rescue plan for the UK retailer.It follows last-minute negotiations with the Pension Protection Fund (PPF) to secure a £9.8m injection into the company’s pension fund.However, the rescue plan entails closing 26 of its 105 UK outlets, putting 800 jobs at risk. The company employs 3,200 staff in total.Toys R Us’s UK staff pension scheme has a deficit of more than £25m.The retailer’s creditors met on Thursday to vote on the rescue plan, which hinged on a resolution of the pension deficit. The PPF said the new offer from the company was composed of £3.8m in 2018, with a further £6m promised over 2019 and 2020.The vote saw 98% of Toys R Us creditors backing the arrangement.Why did Toys R Us fall from grace?Toy sellers bet on Christmas as sales dipToys R Us will continue to trade under its company voluntary arrangement (CVA), which is a step short of going into administration.Steve Knights, managing director of Toys R Us UK, said: “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.”

Toys R Us factfileThe toy retailer started in the US in the 1950s
It reached the UK in 1985, as a subsidiary of the US chain, when it opened five stores
It launched its UK website in 1996
The retailer now has 105 stores around the UK
Its flagship stores are at London’s Brent Cross shopping centre and in Bristol

The company sells largely from warehouse-style stores at the edge of towns, but says these are now “too big and expensive to run”. It is also finding it hard to compete against online toy retailers.Toy’s R Us’s parent company in the US is in formal bankruptcy protection proceedings. Recent reports suggest it is considering closing between 100 and 200 stores in America.
Source: BBC