Toys “R” Us, Inc. has voluntarily filed for relief under Chapter 11, company officials announced Monday evening.
The company’s Canadian subsidiary also intends to seek protection in parallel proceedings under the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice.
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“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.
Here’s what you need to know about the toy retailer’s financial future:
1. BANKRUPTCY Toys "R" Us, Inc. announced that the company and certain of its U.S. subsidiaries and its Canadian subsidiary have voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, Va.
2. WILL STORES BE IMPACTED? The company's 255 licensed stores and joint partnership in Asia are not part of the Chapter 11 filing and CCAA proceedings. Toys "R" Us has approximately 1,600 stores, including Babes "R" Us stores around the world, and they are continuing to operate as usual. The company did not announce any immediate store closures.
3. WHAT'S NEXT? Toys "R" Us will work with investors and debtholders and other creditors to restructure the $5 billion of long-term debt on the company's balance sheet. The company received a commitment for more than $3 billion in debtor-in-possession ("DIP") financing from various lenders, including a JPMorgan-led bank syndicate and certain of the company's existing lenders. The financing is subject to court approval.
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4. HOLIDAY SEASON "As the holiday season ramps up, our physical and web stores are open for business, and our team members around the world look forward to continuing to put huge smiles on children's faces. We thank our vendors for their ongoing support through this important season and beyond," Brandon said.
5. OTHER BANKRUPTCIES Retailers have closed hundreds of stores, filed for bankruptcy protection, and reorganized massive debt loads throughout 2017. Companies like The Limited and Gander Mountain announced this year that they would file bankruptcy — shuttering stores and laying off thousands of workers. Some of the companies to announce bankruptcies this year include: The Limited, Gymboree, Wet Seal, Gander Mountain, RadioShack, hhgregg and others.
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