LONDON (Reuters) - Britain’s pensions lifeboat said on Tuesday it had voted against Toys R Us UK’s proposed rescue plan, casting doubt on the plan’s progress ahead of a crucial creditors meeting on Thursday.
Earlier this month the British arm of Toys R Us Inc IPO-TOYS.N of the United States, which filed for bankruptcy in September, said it would seek creditor approval for a restructuring plan involving closing at least 26 of its 105 stores in 2018 and reduced rent on the stores that stay open.
The firm said it anticipated 500-800 redundancies among its workforce of 3,200.
Toys R Us creditors will vote on the proposed Company Voluntary Arrangement (CVA) on Thursday.
However, the Pension Protection Fund (PPF), an industry-funded lifeboat for ailing schemes, said it had submitted its proxy vote on Tuesday.
“We have indicated we intend to vote against the proposals,” said Malcolm Weir, the PPF’s director of restructuring and insolvency.
He said that since Dec. 4 when Toys R Us UK lodged the CVA proposals it has assessed the current and future financial position of the retailer to ensure the pension scheme, which has a 30 million pound deficit, would not be weakened by the CVA, leading to an even bigger claim on the PPF and its levy payers in the future.
“Given the position of the company, we strongly believe seeking assurances for the pension scheme is reasonable given the deficit in the scheme and questions about the overall position of the company,” Weir said.
He said the PPF could amend its vote if suitable assurances were provided.
Toys R Us UK declined to comment.
However, a source close to the retailer said it was committed to its obligations to the pension fund.
The source said Toys R Us UK had also given a commitment that once its U.S. parent was out of Chapter 11 bankruptcy it would look to reduce the deficit over time.
The CVA requires the support of 75 percent of creditors to be approved.
Reporting by James Davey, editing by David Evans