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Toys ‘R’ Us Is Planning Bankruptcy Filing as Soon as Today

IronRinn

Member
Would post more but that's literally all Bloomberg is saying at the moment.

Toys ”R" Us Inc. is preparing to file for bankruptcy as soon as today, according to people familiar with the situation, Bloomberg News reports.

Updated:
Toys ”R" Us Inc., which has struggled to lift its fortunes since a buyout loaded it with debt more than a decade ago, is preparing a Chapter 11 filing as soon as today, according to people familiar with the situation.

The move would send America's largest toy chain to bankruptcy court, dealing another blow to a brick-and-mortar industry that's already reeling from store closures, sluggish mall traffic and the threat of Amazon.com Inc.

The toy retailer has already hired a claims agent, which typically helps with administering a Chapter 11 process, people with knowledge of the situation said last week. And its vendors have been curtailing shipments amid concern that Toys ”R" Us might not be able to pay its bills.

With speculation of a bankruptcy mounting, shares of Toys ”R" Us's vendors tumbled on Monday. Shares of Mattel Inc., the maker of Barbie and Fisher-Price, fell 6.2 percent -- its worst decline in seven weeks. Hasbro, the company behind Monopoly, Nerf and Transformers, dropped 1.7 percent, marking its biggest decrease in almost two weeks.

Meanwhile, the cost of insuring against default on Toys ”R" Us debt has surged. Prices on six-month and one-year swaps have climbed to record highs, suggesting the market is pricing in all-but-certain odds of a Chapter 11 filing, which protects companies against creditors during a reorganization.

A representative for Toys ”R" Us declined to comment.

Update 2: Officially filed Chapter 11.
The retailer has $4.9 billion in debt, $400 million of which has interest payments due in 2018 and $1.7 billion of which is due in 2019.

"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, the company's chairman and CEO, said in a release announcing the filing.

"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," he added.

The toy seller also intends to seek protection in parallel proceedings for its Canadian subsidiary.

The company said it will continue to operate as usual its approximately 1,600 Toy R Us and Babies R Us stores around the world. The company's operations outside of the U.S. and Canada are not part of the protections proceedings, it said.

The retailer said that it has already received a commitment from some lenders, including a JPMorgan-led syndicate, for over $3 billion in debtor-in-possession financing. Although that's subject to court approval, Toys R Us said it "is expected to immediately improve the Company's financial health and support its ongoing operations during the court-supervised process."
 
I heard this has to do with Bain Capital pulling profit out of the company, and not underperformance of the business. What a shame.
 

Harpuia

Member
How odd, I feel like the two closest Toys R Us's near me just got a remodeling. I guess it was a last ditch effort to justify their existences.
 
I remember in the early 2000's I would go to toys r us every weekend to play all the game kiosks they have there. Good times! Sucks that kids nowadays no longer into physical toys.
 
Well, crap. Ahhh, the memories of buying video games at toys r us...

I have fond memories of Super Mario 3 and TMNT Arcade for the NES.
 

afroguy10

Member
I remember in the early 2000's I would go to toys r us every weekend to play all the game kiosks they have there. Good times! Sucks that kids nowadays no longer into physical toys.

Kids are still into physical toys. My friends son got heaps of Teenage Mutant Ninja Turtles toys, a Stretch Armstrong and some sort of dinosaur egg toy for Christmas last year. Sure he got a few video games as well (not unlike myself) but he plays with his toys all the time.
 

Damaniel

Banned
Considering how much I liked to go there as a kid, I'm kind of sad to see it happen, but specialty retailers are being eaten alive by Amazon and discount stores. Hopefully they'll be able to restructure into something that's still viable going forward.
 
I remember in the early 2000's I would go to toys r us every weekend to play all the game kiosks they have there. Good times! Sucks that kids nowadays no longer into physical toys.

Mid-1980s was the best time to go to Toys R Us as a kid and just ogle everything that was there and on display.
 

jetsetrez

Member
Damn, I have very fond memories of scrubbing the video game isles for way too long and studying all of the plastic flip-over sheets, grabbing slips for everything I wanted.

Now I know why that guy was selling his Toys R Us credit in the BST thread lol.
 

Dougald

Member
Shame, but at least in the UK it's like going into a Tesco - tired, depressing stores that feel like you've stepped back in time 20 years.
 

Damaniel

Banned
Bankruptcy doesn't automatically mean they're going out of business and closing all the stores.

Knowing how these things go, they'll probably file Chapter 11, limp along for a few years with fewer stores (and perhaps scaling back or eliminating the Babies R Us stuff), and eventually they'll still be forced to liquidate.
 
Bound to happen

Juggernauts like Amazon are and will kill retail. It just beyond convenient to stay at home and shop around the world for even cheaper than actual physical stores.

Anyways, ToysRUS Will probably stay as an online store. Their sales online are actually decent.
 
Is it rejuggling the books bankruptcy or slash and burn bankruptcy?

Most generally start out as the former category, but often end up in the latter.

The big toy manufacturers/creditors like Hasbro and Mattel have a big incentive to keep Toys R Us around, at least for this holiday season, so if they end up liquidating, it probably won't be until 2018.
 

starmud

Member
If Bain took its investment and dumped on them that's not good news, that said the company has strong revenue and a good overseas business... even if sales have been trending down here...

I'd be surprised if it's not a restructuring. They also owe a small fortune on old debt and to toy vendors who are dependent on orders. Much less the large remodeling that's underway at high traffic stores for Christmas and the amount of contractors who would be burned.

I don't know how some of small u.s., based toy companies continue without toys r us orders.

you also never know who may come in as an interested party to purchase the company on the cheap given its debt negotiations...
 
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The slow death of the American middle class and the mighty Amazon claim another retailer.

My children will never know the pure joy of being a kid with money to spend in a store filled with nothing but toys.

:(
 

jstripes

Banned
Considering how much I liked to go there as a kid, I'm kind of sad to see it happen, but specialty retailers are being eaten alive by Amazon and discount stores. Hopefully they'll be able to restructure into something that's still viable going forward.

Walmart definitely took a chunk out of their business, well before Amazon became a problem too. People like the convenience of doing all their shopping in one stop, and as Walmart relentlessly expanded over the past 20 years that took a lot of the wind out of T'R'U's sails, and it's just been accelerating.
 
As an 80s kid, Toys R Us was awesome. But I recently went into one, probably for the first time since the mid 90s, because I needed to get a quick toy for my nephew (forgot about his brithday), and it was a shell of what those stores were 20 or 30 years ago, obviously. It felt more like the bargain stores in the 1990s, Zaire, Ames, The Fair, and so on, than what Toys R Us was.

It's not a big surprise... If you're not going to buy online, you'd like go to WalMart or Target.

ANd let's not forget, Toys R Us was the business putting small independent toy/specialty stores out of business in the 1970s and 80s.

I heard this has to do with Bain Capital pulling profit out of the company, and not underperformance of the business. What a shame.

not so sure of that... the company has been in debt to the tune of $5b since the 2005 buyout, but had been performing poorly for almost a decade prior. Payments on that debt were pushed back to 2017, which are now due.

Toys R Us has certainly been "underperforming" for about 20 years, but they had particularly poor Q4's the last two years, which used to obviously be their best quarters. It's part of the general downturn in retail, but also because they pushed debt obligations off until 2017 and 2018 and now those loans are mature.
 
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