AN embattled toy retailer appears to have staved off the immediate threat of administration after creditors approved a turnaround plan.

Toys 'R' Us says proposals to close 26 loss-making stores, including a York outlet, were yesterday passed "overwhelmingly".

Bosses say backing for their company voluntary arrangement (CVA) means the business has safeguarded its immediate future.

Loading article content

It means stores in Gateshead and Sunderland, as well as a site on Teesside Retail Park, near Stockton, will remain open.

The business had faced uncertainty after demands from the Pension Protection Fund (PPF) over a retirement pot.

However, after a night of talks, the PPF said it was satisfied with the firm's proposals. 

The fate of all 3,200 Toys 'R' Us jobs had been hanging in the balance ahead of the ballot, with administrators waiting in the wings had the CVA been rejected.

However, concessions from the company, including an offer to reduce its deficit recovery plan to ten years from 15 years, meant the deal received the PPF's blessing.

In total, Toys 'R' Us has agreed to pay £9.8m into the pension plan, made up of £3.8m in 2018, with a further £6m promised over 2019 and 2020.

Steve Knights, 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 the spring.

"Customers can continue to shop online and there will be no changes to our returns policies or gift cards across this period.”

Malcolm Weir, the PPF's director of restructuring and insolvency, added: "We have been working closely with Toys 'R' Us and their advisers in the run-up to the CVA vote.

"The PPF will always seek assurances on behalf of the pension schemes and pension scheme members it protects, as well as consider the interests of other UK companies that pay the PPF levy."

Other creditors include the firm's landlords, who will stomach rent cuts as part of the restructuring.

The retailer, which is owned by US-based Toys 'R' Us Inc, trades from 84 stores in the UK and has 21 concessions.

Bosses previously said trading had suffered at its warehouse-style stores, which are now "too big and expensive to run", while it has also struggled to keep up with online competitors.

The announcement comes just months after the US-based retailer filed for bankruptcy protection in the US and Canada.