Toys R Us could close-down 25 of its UK stores next year, according to reports by Sky News.
It is believed that the company will announce – possibly as soon as Monday – that it is seeking to enter into a Company Voluntary Arrangement (CVA). The arrangement will require the approval of 75% of the company’s creditors.
CVA’s are a way to allow insolvent companies continue to trade and try to overcome financial difficulties. In Toys R Us’s case this will potentially result in store closures and the redundancy of the employees working in the affected stores.
Toys R Us currently trades from 105 branches and employs around 3,200 members of staff. This means hundreds of jobs could be at risk, however, there are no expected store closures this side of Christmas.
In September, the parent company filed for bankruptcy protection in the USA and Canada in a move make sure the toy retailer’s shelves were stocked during the run-up to Christmas. During the same month the UK company made a number of changes to its directorship.
Frank Muzika has been appointed as a director for the retailer. Mr Muzika has served many years in control of finance at Toys R Us and was already a director of the Toys R Us Property Services, which was set-up soon after the venture capital buyout of the parent company. The property company was created to take ownership of 29 sites where retailer trades from and lease it back to the retailer, a typical private equity endeavour that in this case averages a post-tax profit of £725,000 per year.
Graham Barker, Robert Zarra and Charles Knight have all had their directorships terminated. Charles Knight had only been appointed in January. Robert Zarra had been in place since 2007.
Graham Barker had been Vice President of Operations since September 2015, Mr Barker was previously in charge of store operations before company buyout and ran his own business in the intermediate years.
According to Sky News sources, Alvarez & Marsal, who provide specialist assistance on corporate insolvencies, will handle the CVA proposal.
Informer : Sky News