Hundreds of jobs at risk as Toys R Us faces collapse

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The future of more than 3,000 employees of Toys R Us was in the balance yesterday after the United Kingdom pensions lifeboat demanded that the retailer pay £9 million into its pension scheme in exchange for backing a rescue plan.

The company is seeking a company voluntary agreement (CVA), giving it a breathing space to restructure its finances.

It has already announced a plan to close 26 United Kingdom branches for the loss of 800 jobs; this move could see the company's entire workforce of 3,200 on the scrapheap, just in time for Christmas.

However, the PPF's support is needed for the CVA to be voted through at a meeting of creditors scheduled for 19 December.

The toy retailer - which first came to the United Kingdom in 1985 - needs 75% of its creditors, including its pension fund, to agree to the CVA.

The PPF, the industry-funded, state-backed safety net, demanded that the troubled retailer pump about £9m into the ailing Toys R Us UK pension fund.

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The PFF's vote is likely to be crucial in determining if the CVA is approved, which will be decided on Thursday.

Questions were also raised about why the chain's United Kingdom arm wrote off £584.5m in loans owed by a Toys R Us firm based in the British Virgin Islands and how it might impact the pension scheme.

If they do not do this and subsequently don't get the CVA then they could face administration and losing all 84 of their stores in the UK.

He added that: "The pension scheme is already underfunded and, if we were to vote in favour of the CVA, we would need actions taken that ensure the position of the pension scheme was not going to further weaken".

When it announced plans for the CVA, Toys R Us said it had an ongoing arrangement to make additional contributions concerning the deficit and the insolvency process would not change that.