The UK’s biggest toy retailer, Toys R Us, has gone into administration, putting over 3,000 jobs at risk across the country, after months of negotiations with creditors failed to find an alternative option for the company
Moorfields has been appointed as administrators, with partner Simon Thomas announcing the firm will conduct ‘an orderly wind-down of the store portfolio over the coming weeks.’
All stores the company’s 105 shops in the UK will remain open until further notice and stock will be subject to clearance and special promotions.
Simon Thomas, Moorfields partner and joint administrator, said: ‘Whilst this process is likely to affect many Toys R Us staff, whether some or all of the stores will close remains to be decided.’
Thomas said the administrators will be making ‘every effort’ to secure a buyer for all or part of the business.
‘The newer, smaller, more interactive stores in the portfolio have been outperforming the older warehouse-style stores that were opened in the 1980s and 1990s,’ he said.
The toy retailer has been criticised as failing to develop a strong enough online product to face stiff competition for major online sellers like Amazon.
It is also understood to be facing a significant VAT bill.
Adam Deacock, a barrister at Radcliffe Chambers said: ‘As taxpayers we should all be concerned as the immediate cause of Toys R Us’ administration appears to be its unpaid VAT bill of £15m and other unpaid tax debts can be expected. The fact that this administration follows so soon after Toys R Us’ company voluntary arrangement (CVA) this Christmas shows that pressure is coming from all directions.
‘The administrators will not have long to secure a result, as cash to fund continuing trading will no doubt be very tight and the chances are that if there was an obvious deal to make, someone would have done it already. In theory this should all be the subject of a creditors’ meeting but in practice the administrators may have to move before one can be convened.'
Toys R Us managed to stave off administration in December, when it struck an agreement with the Pension Protection Fund (PPF) to inject £9.8m into its pension scheme over three years. The US parent filed for Chapter 11 protection against bankruptcy in September last year.
Electronics retailer Maplin, which has around 2,500 employees, is also under financial pressures and has filed for administration.
Report by Pat Sweet
