Toys R Us files for Ch. 11 bankruptcy protection
September 19, 2017,
RICHMOND, Va. — Toys R Us, one of the top toy and children’s furniture and juvenile products retailers in the nation, filed for Chapter 11 bankruptcy protection early this week, faltering under a massive debt load that has accumulated at a time when more consumers are shopping on line.
According to the voluntary petition, filed in U.S. Bankruptcy Court for the Eastern District of Virginia Richmond division, the company has assets of $6.57 billion and debt totaling $7.9 billion.
Currently, the company has 1,697 stores and 257 licensed stores in 38 countries. It also runs seasonal “pop-up shops” and express stores during the holiday season. These stores employ a collective 60,000 full- and part-time employees worldwide. In the U.S. it operates in 49 states as well as Puerto Rico, Canada and Guam.
The filing noted that while the company has undertaken a turnaround that has helped save it about $325 million, the company has still experienced expensive debt service, adding that “unrelenting competition from e-commerce and big box retailers continue to drag on the company’s performance.”
“Today marks the dawn of a new era at Toys R Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” said Dave Brandon, chairman and CEO. “Together with our investors, our objective is to work with our debt holders and other creditors to restructure the $5 billion of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business, continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide. 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.”
Included among some of the 50 largest creditors with unsecured claims are: Graco Children’s Products ($59.1 million); VTech Electronics ($11 million); Dorel Juvenile Group ($9.2 million); Delta Enterprise Corp. ($ 8 million); Evenflo Company ($4.96 million); Baby Trend Inc. ($4.92 million); Best Chairs ($4.3 million); Warner Brothers ($2.6 million) and Crayola LLC ($2.6 million).
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