PPF demands Toys R Us chiefs line up 'independent' administrator

The pensions lifeboat is demanding that directors of Toys R Us UK line up an 'independent' administrator if talks about a rescue of the chain break down in the coming days.

Sky News has learnt that the Pension Protection Fund (PPF) has written to the directors of Britain's biggest toy retailer to urge them not to appoint their existing adviser on its restructuring to oversee any insolvency proceedings.

The pressure from the PPF comes just two months after Alvarez & Marsal (A&M) secured approval for a deal that was supposed to safeguard Toys R Us UK's future - and which only secured the PPF's support at the eleventh hour.

Sources said the PPF, which is Toys R Us UK's biggest unsecured creditor, was "uncomfortable" about A&M handling the chain's administration because of its role orchestrating a Company Voluntary Arrangement (CVA) approved three days before Christmas.

They added that PricewaterhouseCoopers, which has been advising Toys R Us UK's pension trustees for months, was likely to be the PPF's preferred choice as administrator.

A spokesman for A&M said in a statement issued to Sky News on Tuesday: "We understand that the PPF has written to the directors of Toys R Us UK.

"We are aware of our professional responsibilities."

The powers of the PPF, which could not be reached for comment, to influence the choice of administrator is limited.

Secured creditors and the company's directors have the right to choose which firm is appointed, although City sources said it would be "dangerous" to ignore the PPF's wishes.

The PPF's demand to Toys R Us UK's directors contains echoes of its efforts following the collapse of BHS to appoint a joint administrator alongside Duff & Phelps.

The tussle over Toys R Us UK's potential insolvency comes just days ahead of a deadline for it to pay a £15m VAT bill to Her Majesty's Revenue and Customs.

The company is racing to secure new investors within the next few days, with more than 3,000 jobs and the fate of one of the UK's best-known retail brands on the line.

A number of parties are said to still be interested in buying parts of the business, although The Entertainer, a privately owned chain, has now withdrawn from talks.

Alteri Investors, an acquirer of distressed retailers, and Hilco Capital, which salvaged the music and entertainment retailer HMV in 2013, are among the remaining potential buyers, although the prospects of a solvent sale appear increasingly remote.

Toys R Us UK only survived the Christmas period after the PPF agreed to vote in favour of the CVA, which is 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.

If it fails to avoid administration, the scheme will be taken on by the PPF, with any such move certain to attract scrutiny from Frank Field, the Labour chairman of the Commons Work and Pensions Select Committee.

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.

Weak retail sales growth data published on Friday by the Office for National Statistics added to the sense of pessimism engulfing the high street, with chains including Maplin battling to secure new investment in order to avoid administration.