The Pension Protection Fund (PPF) has said it intends to vote against restructuring plans put forward by Toys R Us – a move that could plunge the embattled chain into administration.
The PPF is demanding the children’s toy retailer makes the payment to secure three years’ worth of funding upfront for its defined salary staff pension scheme, which has a shortfall of between £25m and £30m.
But it is believed Toys R Us does not have enough cash to meet the PPF demands.
The PPF’s proxy vote intentions mean the planned company voluntary agreement (CVA) may not go ahead as Toys R Us needs the backing of 75 per cent of creditors, including landlords.
But the PPF stressed that talks will continue with Toys R Us until Thursday’s CVA final vote in the hope of reaching an agreement on the funding.
Under its CVA plans, Toys R Us is proposing to close at least 26 loss-making UK stores, putting up to 800 jobs at risk out of its 3,200-strong workforce. Landlords will also take significant rent cuts.
Malcolm Weir, director of restructuring and insolvency at the PPF, said: “We can confirm that the PPF has today submitted its proxy vote on the proposed Toys R Us CVA by the required deadline. We have indicated we intend to vote against the proposals.”
Mr Weir added: “Given the position of the company, we strongly believe seeking assurances for the pension scheme is reasonable given the deficit in the scheme and questions about the overall position of the company.
“We remain in dialogue with the company and their advisers and we are able to amend our vote if suitable assurances are provided.”
Commons Work and Pensions Select Committee chairman Frank Field has also waded into the Toys R Us saga amid concerns over the waiving of a loan worth more than £580m.
Questions have also been raised over recent bonus payments to the chain’s top bosses. Toys R Us trades from 84 stores in the UK and has 21 concessions.
The PPF’s tough stance comes after the Pensions regulator faced heavy criticism for failing to better protect pensioners during BHS’ failure.