Toys R Us UK Follows US Division's Lead To Financial Woes And Unsure Future

The BBC and The Guardian are both reporting on a new development with the UK arm of Toys R Us that's putting serious pressure on the retailer. While the recently discussed bankruptcy protection proceedings of Toys R Us here in the US is not directly impacting other regions, Toys R Us UK is nonetheless investigating solutions to deal with its own financial problems, but with an added wrinkle: If the company cannot contribute £9 million (about $12 million) to its pension fund at least one state agency, the Pensions Protection Fund may vote against its current restructuring proposal, which could ultimately lead to all the UK stores shutting down. Keep reading for more.

The current plan if it passes would result in the closure of 26 stores - or possibly more - with several hundred jobs being cut as a result. According to the reports, this has caused Toys R Us to come under assessment from the Pensions Protection Fund who have made the demand of a large infusion of money to the company's pension fund. However, Toys R Us UK has launched its restructuring plan due to operating losses, and may not be able to secure the needed money to comply with the PPF's direction, which may result in them voting against the current restructuring plan. If that happens, it's likely Toys R Us UK will follow in the foot steps of the US division and enter the UK's equivalent of Chapter 11 Bankruptcy, referred to more plainly as "administration". If that happens, every Toys R Us in the UK could end up on the chopping block, elevating the job losses to the thousands.

One article mentions that the US division's bankruptcy proceedings prevent it from contributing money to help meet the UK's obligations, which otherwise could have been a means to work through this issue. However apart from that, the troubles faced by Toys R Us UK are not directly related to what's happened recently with the company here in the US. It may simply be both an unfortunate coincidence, and a sign of what direction the wind is blowing for the toy retailer around the world in general.

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