Retailer listed debt and assets of more than $1b each in Chapter 11 documents on Monday.
The retailer Toys R Us, loaded with debt in a buyout more than a decade ago, has filed for bankruptcy. The company listed debt and assets of more than $1b each in Chapter 11 documents Monday in US Bankruptcy Court in Richmond, Virginia. Prior to filing, the chain secured more than $3b in financing from lenders including a JPMorgan Chase & Co.-led bank syndicate and certain existing lenders to fund operations while it restructures, according to a company statement. The funding is subject to court approval.
The company didn’t announce plans to close stores, and said its locations across the globe would continue normal operations.
The firm’s operations in Australia and Europe, as well as a joint venture in Asia, are not part of the bankruptcy proceedings.
Michael Freitag, a spokesman for Toys R Us, commented in an email: “Like any retailer, decisions about any future store closings – and openings – will continue to be made based on what makes the best sense for the business.”
Much of the toy merchant’s debt is the legacy of a $7.5b leveraged buyout in 2005 in which Bain Capital, KKR & Co. and Vornado Realty Trust loaded the company with debt to take it private. Since the chain has struggled to dig itself out.
Commenting on the news, Gary Grant, MD of The Entertainer, said: “I fear for the future of many small suppliers that may be affected by this – not a good day for the industry.”
Isaac Larian, CEO of MGA Entertainment, added: “Toys R Us is a valued partner of MGA. They were an earlier supporter of our business back in 1979. Toys R Us has done a great job positioning itself as a trusted retailer with quality products that cares for our brands. We believe their presence as a toy destination is important and their voice as a champion of play is needed in this industry. They will come out stronger out of this.”