News Article

Toys’R’Us Files for Chapter 11 in US and CCAA in Canada


WAYNE, USA – Yesterday Toys’R’Us Inc. announced that it has filed for Chapter 11 relief and protection for certain of its US subsidiaries and in Canada under ‘Companies’ Creditors Arrangement Act’ (CCAA) for its Canadian subsidiary. With operating 1,871 stores and webshops in 37 countries that all sell 14 to 20 inched bicycles and 2-wheeled toys as well as P&A like kid helmets, Toys’R’Us is a sizeable player in cycling products and toys.

Toys’R’Us Files for Chapter 11 in US and CCAA in Canada
Chapter 11 filing and CCAA proceedings does not include Toys’R’Us operations outside US and Canada. – Photo Toys’R’Us

Despite the fact that the Toys’R’Us operations outside the US and Canada are not included in the Chapter 11 and CCAA proceedings yesterday’s announcement is sending shockwaves through the toys giant suppliers base all around the world.

2005 takeover

According to financial media the bankruptcy filing comes after the 2005 USD 6.6 billion takeover of the company by (among others) investor Kohlberg Kravis Roberts which is known for its leveraged buyouts. This left Toys’R’Us burdened with huge debts. This is said to currently stand at USD 4.9 billion which leaves the toy retail giant with USD 400 million in interest payments due in 2018 and USD 1.7 billion of which is due in 2019. Next to its debts Toys’R’Us is also said to be under heavy pressure by the ever increasing competition posed by the likes of Amazon.
In yesterday’s statement Toys’R’Us says on its debt default in the US and Canada that “the company intends to use these court-supervised proceedings to restructure its outstanding debt and establish a sustainable capital structure that will enable it to invest in long-term growth.”

More is at the Company’s Toys’R’Us restructuring website at

Business as usual

As said Toys’R’Us operations outside of the US and Canada, including its approximately 255 licensed stores and joint venture partnership in Asia, which are separate entities, are not part of the Chapter 11 filing and CCAA proceedings. The company also emphasizes in its statement “The some 1,600 Toys’R’Us and Babies’R’Us stores around the world – the vast majority of which are profitable – are continuing to operate as usual, providing customers with great service and a curated assortment of merchandise in the toy and baby categories. Customers can also continue to shop for the toy and baby products they are looking for online on the newly launched and web stores. Customers should expect the Company’s loyalty programs, including its Rewards“R”Us, Geoffrey’s Birthday List and Babies“R”Us Registry, to continue as normal.”

Restructuring long-term debts

“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 Chief Executive Officer. “Together with our investors, our objective is to work with our debtholders and other creditors to restructure the USD 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.”

In the meantime the toy giant has received a commitment for over USD 3.0 billion in debtor-in-possession (DIP) financing from various lenders, including a JPMorgan-led bank syndicate and certain of the Company’s existing lenders, which, subject to Court approval, is expected to immediately improve the Company’s financial health and support its ongoing operations during the court-supervised process.

Authority to continue payment

Toys’R’Us also emphasizes that it is “Committed to working with its vendors to help ensure that inventory levels are maintained and products continue to be delivered in a timely fashion. In conjunction with the Chapter 11 process in the US we have filed a number of customary motions with the bankruptcy court seeking authorization to support our operations during the restructuring process and ensure a smooth transition into Chapter 11 without disruption, including authority to continue payment of employee wages and benefits, honor customer programs, and pay vendors and suppliers in the ordinary course for all goods provided on or after the filing date.”

Comment on this article