Toys R Us UK Could Go Into Administration Next Week

Following news today that Toys R Us are going to close another 200 stores in the US, it’s being reported by Sky News that the directors of Toys R Us have met officials from the Pension Protection Fund (PPF) on Friday to notify them of the impending move amid fading hopes of a rescue deal.

Toys R Us have been trying to find a buyer for its UK business but with a £15 million VAT bill due next week, this could result in a loss of 3000 jobs in over 100 stores across the country.  Sources said that the directors of the UK’s biggest toy retailer were likely to appoint administrators on Tuesday morning barring the emergence of a last-minute financial package to keep it afloat.  One insider said that such a prospect was “very, very remote” on Friday evening.

A corporate recovery specialist company called Moorfields is now on standby to deal with the potential insolvency.  The company previously worked with Blockbuster going into administration five years ago.  Two other recovery companies, Alteri Investors and Hilco Capital, have both held talks with Toys R Us UK but have baulked at the complexity of a deal.

Toys R Us went into a Company Voluntary Arrangement (CVA), which allowed it to work through the Christmas period and have already announced job cuts and closures of some of their stores.

The closure of these stores, will give Disney and other toy companies like Hasbro, Jakks Pacific and Mattel, less places to offer their products.

While going into administration has left many big chains closed down like BHS, Woolworths, Comet, while some companies have come out of administration and continue to run like Game and HMV.  But there can be little doubt that the future of the company globally is at risk, though the brand could easily carry on as an online retailer but the publics faith in the company will continue to get rocked by this news.