Toys ‘R’ Us Files for Chapter 11 Bankruptcy Protection

by Katie Lee

Wayne, N.J. — Toys ”R” Us Inc. filed for Chapter 11 bankruptcy protection on September 18, 2017. The company’s Canadian subsidiary also plans to seek protection in parallel proceedings under the Companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice.

No store closings have yet been announced in conjunction with the filing. The Wayne, N.J.-based toy retailer’s approximately 1,600 Toys ”R” Us and Babies ”R” Us locations will continue to operate through at least the holiday season. Customers may also continue to shop on the company’s newly launched web stores.

“Together with our investors, our objective is to work with our debtholders 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,” says Dave Brandon, chairman and CEO of Toys ”R” Us Inc.

The company’s debt largely stems from a $6.6 billion buyout in 2005 led by KKR & Co. LP, Bain Capital LP and Vornado Realty Trust. Toys ”R” Us has received a commitment for over $3 billion in debtor-in-possession financing from various lenders, including a JPMorgan-led bank syndicate and several of the company’s existing lenders.

Toys ”R” Us hopes this financing, subject to court approval, will immediately improve the company’s financial health and support its ongoing operations during the court-supervised process.

The company’s operations outside of the U.S. and Canada, including approximately 225 licensed stores and joint venture partnerships in Asia, are not part of the Chapter 11 filing or CCAA proceedings. Kirkland & Ellis LLP is serving as principal legal counsel, Alvarez & Marsal is serving as restructuring advisor and Lazard is serving as financial advisor to Toys “R” Us.

— Katie Sloan

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