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What happens if Toys R Us goes bust?

If you've got your Christmas shopping from toy retailer Toys R Us, find out how this could affect returns, gift cards and faulty goods

What happens if Toys R Us goes bust?

Update 28 February 2018: Toys R Us UK went into administration, with efforts still being made to secure a buyer for all or part of the business. Its administrator Moorfields has been appointed to begin the wind-down of the UK toy retailer but has said all 105 Toys R Us stores would remain open until further notice.

Update 21 December 2017: Toys R Us UK has been saved from collapse after a majority of its creditors agreed to its plan to restructure its finances. These plans mean it will pay £9.8m into its pension fund and will continue to trade over the Christmas period as normal.

The future of Toys R Us in the UK has been plunged into doubt, which could be bad news for parents who have already picked up Christmas presents from the popular children’s retailer.

Although it’s the busiest time of year for many shops, and Toys R Us is a shopping staple for many parents, the retailer is facing serious financial trouble. This comes after the Pension Protection Fund (PPF) ordered the company to put £9m into its pension fund, as well as to reach a deal to restructure its finances to sort out the debt it owes by Thursday 21 December 2017.

It was previously announced that 26 of the UK’s Toys R Us stores would close, but failure to reorganise its debt could mean that the whole company goes into administration.

Roughly 3,200 jobs are at risk if Toys R Us files for bankruptcy (as it already has in the USA and Canada), but there’s also a risk to shoppers.

While a spokesperson from Toys R Us has said: ‘there will be no disruption for customers shopping through the Christmas and New Year period’, it’s important to know your rights if the company goes under, as it could affect returns, gift cards and faulty goods.

Download our free consumer rights guides which can help resolve your shopping problems.

Your rights when a company goes into administration

Knowing your rights will help you to get what you deserve if any company goes into administration. A time like this can be an administrative nightmare for the company, so it may be less helpful than you would like or expect. Many of your rights aren’t valid when a company is in administration, but it’s always worth trying to get your money back.

  • If you want a return or exchange

Your right to a return depends what the administrator who takes over the company decides to do. It’s the administrator’s job to save the company money, so it may decide not to accept product returns. If there’s nothing wrong with the item, you may not be able to return it. In this case, you could try complaining in writing.

  • If it’s faulty

Usually you are entitled to return an item for a refund or exchange if it’s faulty, but this is invalid if the company goes bust. However, if you paid for items worth less than £100 on a credit or debit card, you may be able to claim your money back under chargeback. If it’s worth more than £100 and you paid on a credit card, you can claim the money back with your card company under Section 75 of the Consumer Credit Act.

  • If your order doesn’t arrive

Again, if you paid more than £100 on a credit card, you can claim from your credit card company under Section 75. If you paid less, or with a debit card, the company can decide to stop accepting chargeback claims, so you may lose out. In this case, we’d recommend writing to the administrator to complain.

  • If you give or receive gift vouchers

Companies in administration sometimes stop accepting gift cards, so this depends on what the administrator decides to do. This is within the law, but if the retailer refuses to honour your gift cards, wait a few days to see if it changes its mind. If not, you need to make a claim in writing with proof of your vouchers. There’s no guarantee this will work, and it could take 12 months to be processed.

We’ve also got more advice on what to do if a company goes into administration and how to complain if a company goes bust.

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