Toys 'R' Us Bankruptcy
Toys ‘R’ Us filed for Chapter 11 bankruptcy protection last Monday, September 18. The company plans to keep its 1,600 Toys 'R' Us and Babies 'R' Us stores open across the world through the holiday season. According to the CNN website, Toys ‘R’ Us “will eventually close some of its underperforming locations as part of the bankruptcy process.”
(Photo courtesy of allbusinesshours.com website)
In early September, various news sites started reporting that Toys ‘R’ Us would be filing for bankruptcy. This news “started a dangerous game of dominos,” said Toys ‘R’ Us CEO Dave Brandon in a 47-page statement filed with the U.S. Bankruptcy Court in Richmond, Virginia.
According to the Northjersey.com , the early reports of bankruptcy caused “nearly 40 percent of the company’s toy vendors” to refuse to ship merchandise without cash on delivery, cash in advance, or payment of all outstanding bills. This left the company with no option but to seek bankruptcy protection.
According to the CNN website, Toys 'R' Us received $3 billion in bankruptcy financing. The company plans to use this money to keep all its stores in operation through the critical holiday season. Toys ‘R’ Us then plans to restructure the company, alleviate its debt burden and revamp its stores. Officials at Toys ‘R’ Us believe this to be a new beginning for the company.
Chairman of the corporate restructuring department of the New York law firm Wilk Auslander, Eric Snyder, predicted on the Northjersey.com that “no landlord is going to be spared.” Snyder believes that Toys ‘R’ Us not closing any stores yet indicates that they will contact all their landlords after the holiday season to renegotiate their rent. Snyder expects the company to tell their landlords to improve their terms or Toys ‘R’ Us will leave.Joliet also has a large Toys 'R' Us store. There is no word yet on whether the Joliet location will close.
Though CEO Dave Brandon called the retail landscape "increasingly challenging and rapidly changing" in his bankruptcy statement, he remains confident that the Toys 'R' Us brand will "live on for many generations."
