Kirkland advises Toys R Us as retailer secures pensions deal to avoid Christmas collapse

Kirkland & Ellis has advised Toys R Us on a deal with the Pension Protection Fund (PPF) that has today (21 December) saved the company from administration.

The company voluntary agreement (CVA) will see the toy retailer’s pension deficit recovery plan reduced from 15 years to ten years, with £3.8m injected into the pension scheme in 2018 and a further £6m promised over 2019 and 2020. The agreement was accepted in a creditor vote this morning.

The deal means that all Toy R Us stores will now remain open until spring next year. However, a statement from the company – which employs more than 3,000 people – confirmed that as part of the CVA, a number of stores have been identified for closure. Consultations with employees will begin in the New Year.

Kirkland – which also acted for the toy retailer on the Chapter 11 bankruptcy of its US business earlier this year – is fielding a team led by London restructuring partners Kon Asimacopoulos and Elaine Nolan.

It is understood that the PPF has approached Hogan Lovells - which has advised the fund in the past – although the firm has not yet been officially instructed.

Restructuring firm Alvarez & Marsal has also been involved in negotiations over the CVA.

Separately, Labour MP Frank Field, the chair of the Work and Pensions select committee, has written to Toys R Us managing director Stephen Knights to query $21m (£15.7m) paid out in bonuses to company executives this year.

The general counsel of Toys R US is James Young, who has been at the companay since 2007.

He was was promoted to GC this November, replacing Cornell Boggs, who left the company after less than a year in the role.

Hogan Lovells and Alvarez & Marsal declined to comment. Kirkland was approached for comment.