Toys R Us UK restructure proposal faces PPF opposition

Toys R Us CVA

Toys R Us’ plans to restructure its UK business could face decisive opposition from the Pension Protection Fund (PPF).

It comes as the pension trustees reportedly drafted PwC to advise them on the toy retailer’s proposed Company Voluntary Arrangement (CVA), which was revealed last week.

The CVA involves closing 26 of Toys R Us’ 100 UK stores and making around 500 members of staff redundant.

PPF has not officially confirmed how they would vote on the CVA, although according to sources speaking to Sky News, there were concerns the proposals may be “simply kicking the can down the road”.

The PPF holds around 20 per cent of the creditors’ votes eligible to be cast in the CVA.

In order for the restructuring proposals to go ahead, the CVA will need the approval of a 75 per cent majority of creditors.

It is unclear whether the retailer’s CVA proposal will be approved, although the PPF’s 20 per cent stake could lead to a decisive vote.

The proposed CVA come after Toys R Us’ US counterpart filed for Chapter 11 bankruptcy in September, having amassed £3.6 billion in debt.

Toys R Us UK is also thought to have made losses in seven out of the last eight years.

In addition, former UK boss Roger Mclaughlan received a £1 million pay package in 2015, a sharp increase on his £356,000 paycheck just a year earlier. In 2016 this jumped to £1.3 million.

Toys R Us UK has also come under fire from the Work and Pensions Committee which has raised concerns over actions that potentially led to an £18.4 million deficit in its pensions scheme.

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