Photo by Mike Mozart/Flickr
Toys R Us has qued up administrators as worries heighten that the UK business will likely collapse early next week placing approximately 3,200 jobs at risk.
The news that the management of the company is preparing for insolvency comes following weeks of crunch discussions with investors and possible buyers, with bosses of the UK arm of the retailer trying to secure a lifeline that is worth £120m to pay off its lenders and overhaul its operations.
Toys R Us had been hoping that it could implement a five-year plan with the use of the funds, reducing staff and stock ranges, and closing stores. It was asking its potential buyers to immediately make a payment of £50m to pay off the lenders of its parent company in the United States, which entered bankruptcy protection last September.
However, the management seems to have lost faith that a deal will be agreed upon, with sources informing reporters that Moorfields Corporate Recovery had been qued to handle the administration.
It is believed that, administrators will be appointed on Tuesday unless Toys R Us gets a hold of a major cash injection, and that the group already met with the Pension Protection Fund last Friday to warn them regarding the development. The said news was originally reported by Sky.
Recently, Toys R Us has had a difficult time to stay afloat, having reported a loss for seven of the last eight years amid decreasing shopper footfall and intensifying competition from various online retailers such as Argos and Amazon.
It had been close to collapse late in 2017. However, it was given a last-minute reprieve following the approval of its restructuring plan by the pensions lifeboat of the United Kingdom.
The said move, which saw the retailer pledge to pump more funds into the pension scheme of the company, had meant that at least 26 stores were set to shut down. However, it had saved thousands of jobs. Those workers of Toys R Us currently face more uncertainty regarding their future.
Should the company fall, it would be yet another sign of troublesome conditions in the market, after a series of insolvencies with names such as Jaeger and Multiyork among those that are leaving the high street.
Figures that are compiled by Deloitte revealed that the number of retailers that are toppling into administration was up in 2017 for the first time in five years.
And there are no signs that it will prove to be any easier in 2018, with predictions from the Centre for Retail Research suggesting that the number of shops across the United Kingdom will fall by 22pc to 220,000 this year.
Moorfields and Toys R Us both refused to comment regarding the matter.