Toys R Us saved after reaching last-minute deal with creditors

The company has agreed to pay £9.8m into its pension scheme as part of the agreement

The company’s long-term future remains uncertain (Getty)

Toys R Us has been rescued from the brink of collapse after reaching a last-minute deal with its creditors on Thursday.

The company has agreed to pay a total of £9.8m into its pension fund. Next year it will pay £3.8m, with a further £6m paid over 2019 and 2020.

The Pension Protection Fund (PPF) had said it would vote against the rescue deal unless the company upped its offer to pay into the scheme, which is more than £25m in deficit.

Under the deal, 26 loss-making stores will close and up to 800 people could still be made redundant, though the company did not confirm the figure on Thursday.

All stores will remain open for business until next spring, managing director Steve Knight said in a statement.

“Customers can continue to shop online and there will be no changes to our returns policies or gift cards across this period,” he added.

The company said it would communicate in the new year with staff who are set to lose their jobs.

Malcolm Weir, the PPF’s director of restructuring and insolvency welcomed the plan.

“The deal also sees the pension deficit recovery plan shortened to 10 years, while the company has undertaken to seek additional support from the US parent company for the new plan for the pension scheme,” Mr Weir said.

“Furthermore the trustees will have greater powers if any of the above conditions are not met.”

Despite the agreement, the company’s long-term future remains uncertain.

It has been battling tough market conditions and declining sales for some time. While its smaller shops and online store have held up, the bigger, warehouse-style outlets have suffered, especially as a result of the emergence of online behemoths like Amazon.

In September, Toys R Us filed for bankruptcy protection in the US, in what experts at the time described as one of the largest ever Chapter 11 filings by a speciality retailer.

Figures released earlier this week show that the US business lost $623m (£466m) in the three months to the end of October.