Toys R Us Has Officially Filed for Bankruptcy

A Toys
A Toys"R Us store at Forum The Shopping Mall Singapore December 2005
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20 September, 2017

The toy seller is also seeking protection for its Canadian subsidiary.

Toys R Us, the national toy chain that has been around since the 1950s, announced Monday night that the company had filed for bankruptcy, just ahead of the holiday shopping season.

Once the dominant player in the United States toy market, the company has struggled with $5bn of long term debt as it faced rising competition from rivals such as Amazon, Walmart and Target.

U.S. toy retailer Toys "R" Us has filed for bankruptcy protection in the USA and in Canada in a bid to restructure its debts.

Operations outside the USA and Canada, "including its approximately 255 licensed stores and joint venture partnership in Asia", are not part of the bankruptcy proceedings, the company said in a statement late on Monday.

Toys R Us has hired lawyers at Kirkland & Ellis to help restructure the $400 million debt it will have to repay in 2018, according to the report.

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Bain Capital, KKR & Co. and Vornado Realty Trust engaged in a $7.5 billion leveraged buyout of Toys "R" Us back in 2005 to take it private.

"We are confident that these are the right steps to ensure that the iconic Toys "R" Us and Babies "R" Us brands live on for many generations", company CEO Dave Brandon said in a statement.

The filing is created to give the company time to get its financial house in order by restructuring its $5 billion debt and ensure there is enough money for continued operations. Loyalty programs-including Rewards "R" Us, Geoffrey's Birthday List and Babies "R" Us Registry-are also expected to continue as normal.

Toys "R" Us is the second-largest toy seller in the USA behind Amazon, according to consulting firm Kloster Trading Corp.

Most of its 1,600 stores across the world are profitable, and only those in North America are a part of these court filings, it said.

The US mother company said it received a commitment for over US$3 billion in debtor-in-possession financing from lenders including a JPMorgan-led bank syndicate and certain existing lenders.


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