Published: Wednesday 20 September, 2017

Toys R Us Files for Chapter 11 Bankruptcy Protection Ahead of Holidays

The biggest toy store chain in America, Toys R Us, has filed for bankruptcy. Toys R Us is seeking Chapter 11 bankruptcy protection to reassure it suppliers just ahead of the lucrative holiday shopping season.

Toys R Us bankruptcy

Toys R Us seeking Chapter 11 bankruptcy protection. (Roberto Machado Noa/LightRocket via Getty Images)

Only the US side of the business is covered by the bankruptcy filing. However, Canadian branches are reportedly seeking similar Chapter 11 protection, according to a statement released by Toys R Us. Operations outside the United States and Canada, including those in Asia, are NOT affected.

In seeking bankruptcy protection, the company is seeking to reorganize its stocks and finances ahead of the holiday shopping season.

The largest toy store chain in the US has reportedly been struggling to cope with consumers’ preference for online shopping in recent years. With more and more Americans opting to shop online, Toys R Us saw its revenues decline significantly. Aside from online shopping, discount chains have also eaten a big chunk of the company’s sales.

According to reports, Toys R Us is saddled with an estimated $5 billion debt. But the company said it received a commitment for over $3 billion in debtor-in-possession financing from its lenders, which it will use to pay its suppliers ahead of the shopping season.

“We expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” said CEO Dave Brandon. “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.”