Toys R Us seeks bids for European arm as UK division heads for collapse

Toys R Us is seeking bids for its stores in Continental Europe just hours‎ before it plans to place its British operations into administration.

Sky News understands that advisers to the stricken toy retailer have told potential buyers of its European division to lodge offers by the close of business on Monday.

Toys R Us trades from more than 230 shops in 10 European markets, including Austria, France, Germany and Spain.

Several private equity firms are understood to be planning to table bids for the division, which also has a presence in Denmark, Finland, Iceland, Norway, Poland and Portugal.

It was unclear this weekend whether the European arm of Toys R Us faces a similar path towards insolvency if a sale cannot be agreed in the coming weeks.

Sky News revealed on Friday that Moorfields, a corporate recovery firm, is being lined up to handle the administration of Toys R Us UK, which is expected to be triggered on Tuesday.

The move would threaten more than 3,000 jobs on an already-troubled high street.

Officials from the Pension Protection Fund (PPF (Shenzhen: 300258.SZ - news) ), Toys R Us UK's biggest unsecured creditor, were notified late last week of the impending insolvency amid fading hopes of a rescue deal.

The chain has little hope of paying a £15m VAT bill due on Tuesday without a buyer being found.

Toys R Us UK trades from more than 100 stores, and only made it through the Christmas period after an eleventh-hour rescue deal was reached with creditors to close dozens of outlets and slash its rent bill.

Alteri Investors, an acquirer of distressed retailers, and Hilco Capital, which salvaged the music chain HMV in 2013, have both held talks with Toys R Us UK in the last fortnight but have baulked at the complexity of a deal.

The so-called Company Voluntary Arrangement was supposed 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.

Toys R Us UK is far from the only British retailer experiencing an existential crisis.

Maplin, the electricals chain, is racing to find a buyer and avoid administration, while New Look and House of Fraser are among the retailers seeking financial support from landlords and other creditors.

A spokesman for Toys R Us declined to comment.