Toys R Us files for Chapter 11 bankruptcy protection

Randall Padilla
September 21, 2017

The 82 stores of Toys " R " Us in Canada, as well as its website, will continue to be operated during the restructuring proceedings under the Law on arrangements with creditors of companies ("CCAA").

With employees and customers looking on, he said Toys "R" Us isn't looking to close a large percentage of stores and that toymakers have been "bending over backwards" to help the chain. Toys R Us, like other companies who have filed for bankruptcy protection, such as Payless ShoeSource Inc. and Gymboree Corp., have to get with the program.

A recent announcement from Toys R Us that it is filing for Chapter 11 bankruptcy protection may have some shoppers spooked. Three private-equity firms bought Toys "R" Us in 2005 in a leveraged buyout, adding substantially to its borrowings; it pays around $400m a year in interest costs, even as it tries to compete with Amazon.

The bankruptcy filing by the company also may have global implications, especially for Chinese toy manufacturers. Toys R Us said its Canadian unit also meant to seek reorganization in the bankruptcy court in Ontario.

The filing comes just as the retailer is gearing up for the holiday shopping season, which accounts for the bulk of its sales.

"I've always said that if there's no Toys "R" Us, there is no toy business". The Chapter 11 filing is one of the largest by a specialty retailer.

ASK young American parents about Toys "R" Us and they are likely to be able to sing a jingle from their childhood: "I don't wanna grow up, "cause maybe if I did, I couldn't be a Toys 'R" Us kid".

For decades, it was a destination for families across northeast OH, but tonight it's in the red and facing bankruptcy but are Toys R Us prices bad enough to drive away customers.

"The past decade has seen a dramatic change in the domestic toy market with new channels, increased competition, and new technology all having a deleterious impact on the sector and traditional toy stores".

Operations outside of the United States and Canada, including about 255 licensed stores and joint venture partnerships in Asia, which are separate entities, are not part of the bankruptcy proceedings, Toys "R" Us said.

"Oh my God, they are very important, and people don't understand", Isaac Larian, founder and chief executive officer of MGA, said of the toy chain.

So is this the end of Toys "R" Us? Toys R Us suppliers started stepping back a little too late - reminding suppliers everywhere that paying attention to your buyer's financial health is as important as managing your own.

By the time Lazarus retired in 1994, the company had grown to more than 1,000 stores. He later began selling toys as well and adopted the Toys R Us name in 1957, with the backward R in the logo to give the impression a child had written it.

The Associated Press reported that GlobalData Retail estimates that in 2016 about 13.7 percent of toy sales were made online, up from 6.5 percent five years ago.

Other reports by AllAboutTopnews

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