Toys R Us files for Chapter 11 bankruptcy protection

Ann Santiago
September 20, 2017

The toy giant has struggled to emerge from under so much debt, which has blunted its expansions in physical and online storefronts.

Toys "R" Us Inc, the largest USA toy store chain, filed for bankruptcy protection on Monday, the latest sign of turmoil in the retail industry caught in a viselike grip of online shopping and discount chains.

Brick and mortar retailers continue to face pressure from online competition and changing consumer taste, helping lead to high profile restructurings including Sears Canada's bankruptcy protection this past June.

Toys "R" Us is reportedly set to file for bankruptcy just ahead of the busy holiday shopping season.

The company's chairman and chief executive officer Dave Brandon said he was "confident" that the action would allow the store to "live on for many generations".

Operations outside of the U.S. and Canada operate as separate entities are not part of the proceedings and shops will remain open. Toys "R" Us now has more than 1,600 branches across the globe.

Fatally, it was saddled with billions of dollars in debt through a buyout in 2005 by private equity firms KKR LP and Bain Capital LP, even though its decline was well established by then.

In the case of Toys R Us, the company said it has a commitment for $3 billion in financing from JPMorgan Chase and other companies. The Toys R Us loyalty program also remains in effect and the store will continue to accept all returns and honor all warranties.

It said on Tuesday the Toys " R " Us and Babies " R " Us stores and e-commerce sites around the world are open for business.

According to USA Today, the store has plans to renegotiate its leases for cheaper rent, convert some of its existing properties into side-by-side Toys R Us and Babies R Us brands, and improve its recently launched online store.

The retailer had already said it was working with an investment bank to assess options for about $400 million in debt that comes due next year.

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