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Toys R Us likely to go into administration

RBR Staff Writer Published 26 February 2018

Toys R Us is likely to go into administration as the talks with buyer have failed.

The move could result in the closure of about 200 stores and loss of about 3,200 jobs in the company.

Recently, the company's US-based bankrupt parent company decided to sell its UK division along with other European stores.

The company is facing a £15m VAT, as per Sky News and the company’s management is all set to appoint administrators.

The management team had also met with officials from the Pension Protection Fund (PPF) to convey them about the same. There is a £30m deficit in its pension scheme.

Last September, its parent company filed for bankruptcy protection in the US and Canada after its debt stood at £5bn. The company is trying to financially restructure itself and in the process is closing down hundreds of stores in the US.

The UK division has also been struggling with the same reason as its parent company. Customers have been opting to buy toys online and have avoided the stores.

In December, the UK division won a stay of execution where landlords took back keys from 26 stores and accepted less rents for the stores that stayed open. But this plan also failed as the holiday season failed to bring any shoppers to the stores.

When the parent company applied for bankruptcy protection, it was stated that the move would not affect the UK business. But later on, it was declared that the company would axe hundreds of jobs and close down one-fourth of its stores in the UK.

Corporate recovery company Moorfields is expected to have been put on standby to oversee Toys R Us’ administration.

Image: Toys R Us store in Vaughan Mills, Ontario. Photo: Courtesy of Raysonho @ Open Grid Scheduler / Wikipedia.org.