5,700 jobs at risk as Toys R Us and Maplin face collapse
Maplin and Toys R Us UK could fall into administration on Wednesday amid a high street crisis, Sky News learns.
Wednesday 28 February 2018 06:07, UK
Nearly 6,000 retail sector jobs are hanging in the balance as the UK arm of Toys R Us and electricals chain Maplin prepare to call in administrators.
Sky News has learnt that Edinburgh Woollen Mill's discussions about a rescue of Maplin, which employs 2,500 people, broke down just hours before a deadline to agree a solvent sale of the business.
Administrators have been lined up from PricewaterhouseCoopers (PwC), with an appointment likely on Wednesday unless another bidder strikes a deal, according to people close to the situation.
Toys R Us UK, which has a 3,200-strong workforce, is also expected to crash into administration following weeks of talks with potential buyers.
If confirmed, the two insolvencies will add up to one of the bleakest days for the high street in recent years, and would come as numerous well-known chains face a lethal cocktail of rising costs, online competition and dwindling consumer spending in some parts of the retail sector.
The administration of Toys R Us UK will leave the Pension Protection Fund (PPF) facing a bill of about £37m as it absorbs the pensions liabilities of Britain's biggest toy retailer, insiders said.
The pensions lifeboat was notified of the impending move on Friday, with Moorfields, a corporate recovery specialist which worked on the administration of the DVD rental chain Blockbuster five years ago, on standby to handle the administration.
Gordon Brothers is understood to have been engaged in talks about handling a liquidation of Toys R Us UK's stock.
Toys R Us UK has been engaged in a frantic search for a buyer for the last month following weak Christmas trading which has left it with little hope of paying a £15m VAT bill.
Its imminent collapse comes almost exactly two months after the chain appeared to have salvaged its future by winning support from creditors - including the PPF - for a deal to slash its rent bill and close dozens of loss-making stores.
Toys R Us UK only survived the Christmas period after the PPF agreed at the 11th hour to vote in favour of the CVA, which had been due to trigger the closure of a quarter of its 105 shops.
The CVA was expected to involve the injection of £9.8m into the retailer's pension scheme, while shortening its deficit recovery period to 10 years.
A small proportion of that money has been paid in in recent weeks, but the majority remains outstanding.
The entire European operations of Toys R Us are also on the market, encompassing 236 stores outside the UK in 10 countries including Austria, France, Germany and Spain.
At Maplin, talks with Edinburgh Woollen Mill (EWM), the high street empire owned by the tycoon Philip Day, are understood to have broken down following a disagreement on the ongoing involvement of Maplin's current owner.
Maplin has been seeking tens of millions of pounds to keep it afloat, with a number of substantial liabilities falling due in the coming days.
Maplin, its current owner Rutland, EWM, Toys R Us UK and the PPF all declined to comment.