The Pension Protection Fund, London, voted in favor of proposals at a meeting to consider the restructuring of Toys R Us, following agreements by the company regarding its pension fund.
Toys R Us, Wayne, N.J., announced Sept. 18 it had voluntarily filed for Chapter 11 bankruptcy protection in the U.S. As part of ongoing financial restructuring efforts, the U.K. business had instigated a process to seek creditor approval for a company voluntary arrangement. This process "can provide a company with some breathing space to allow it to reorganize or restructure its funding and/or its operations with as little disruption to day-to-day trading as possible," said an explanation on the firm's website. Should a CVA fail, the company goes into administration.
A statement by Toys R Us Thursday said 98% of creditors voted in favor of the arrangement.
The U.K. firm sponsors the Toys R Us Limited Staff Pension and Life Assurance Scheme. The U.K. corporate office is based in Maidenhead, England.
A statement by the PPF said the company has agreed to pay £9.8 million ($13.1 million) into the plan, made up of £3.8 million in 2018 and a further £6 million promised over the years 2019 and 2020. The deficit recovery plan has also been shortened to 10 years, while the firm is looking for additional support from the U.S. parent company for a new plan for the pension fund, said the statement.
"We have been working closely with Toys R Us and their advisers in the run up to the CVA vote," said Malcolm Weir, director of restructuring and insolvency at the PPF, the U.K. lifeboat fund for defined benefit plans of insolvent companies. "We can confirm that an agreement has now been reached and we will now be voting in favor of the proposals at the CVA meeting today."
The fund trustees will also have greater powers should the conditions for the pension fund not be met.
"This offer goes a long way to addressing the PPF's concerns, and in derisking the pension scheme, offering greater protection for the current and retired members in the pension scheme. The PPF will always seek assurances on behalf of the pension schemes and pension scheme members it protects, as well as consider the interests of other U.K. companies that pay the Pension Protection Fund levy," said Mr. Weir.
The size of the pension fund, its deficit and further details could not be learned by press time. Spokesmen for Toys R Us could not immediately be reached for comment.