Toys R Us has plunged into administration putting 3,000 jobs at risk after the retailer failed to pay a £15million VAT bill.
The toy seller was scrambling to find a buyer before hitting the payment deadline last night on the hefty bill.
Administrator Moorfields has been appointed to conduct what it called an orderly wind-down of the company’s store portfolio, although the firm insisted it is still seeking a buyer.
Toys R Us has plunged into administration putting 3,000 jobs at risk after the retailer failed to pay a £15million VAT bill
Simon Thomas, Moorfields partner, said: ‘We will be conducting an orderly wind-down of the store portfolio over the coming weeks.
‘All stores remain open until further notice and stock will be subject to clearance and special promotions.
‘We’re encouraging customers to redeem their gift cards and vouchers as soon as possible.
‘We will make every effort to secure a buyer for all or part of the business.’
All stores will continue trading until further notice and much of the stock will be subject to clearance discounts and other special promotions, Moorfields confirmed.
‘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.
‘We have informed employees about the process this morning and will continue to keep them updated on developments. We are grateful for the commitment and hard work of employees as the business continues to trade,’ Mr Thomas added.
Gift cards and vouchers will be honoured while the stores continue to trade, but customers are being encouraged to redeem vouchers as soon as possible as stores may be subject to closure without notice.
No further gift cards will be sold from Wednesday.
Toys R Us, which employs around 3,000 staff in the UK, is understood to have struggled with cash flow pressures after sales were squeezed by worse-than-expected trading over the crucial Christmas period.
It comes after the beleaguered firm announced a Company Voluntary Arrangement, which allows debt to be paid back over a fixed period, at the end of last year.
This move was intended to shore up the company’s financial position by allowing it to shut loss-making stores and secure substantial discounts on rental costs.
The restructuring plan won the approval of 98 per cent of Toys R Us’s creditors in December, and had the backing of the Pension Protection Fund (PFF).
The move would see at least 26 loss-making UK stores shut and spark the loss of up to 800 jobs.
The PPF had earlier refused to back the retailer’s plans, but concessions from the company, including an offer to reduce its deficit recovery plan to 10 years from 15 years, meant the deal finally received its blessing.
In total, Toys R Us has agreed to pay £9.8 million into the pension plan, made up of £3.8 million in 2018 and £6 million over 2019 and 2020.