September 19, 2017
Toys ‘R’ Us Inc. filed for Chapter 11 bankruptcy late Monday, and is asking a judge to grant the giant U.S. toy store chain permission to borrow money in order to pay suppliers. The Wayne, NJ-based retailer is hoping to restructure $5 billion in long-term debt, and salvage what it can from the fast-approaching and critical Q4 holiday shopping season, which accounts for 40% of its net sales.
Toys ‘R’ Us Chief Executive Dave Brandon said, “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, 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.”
The filing is one of the largest ever by a specialty retailer, and reflects the massive changes sweeping across the retail industry. Leading up to the filing, nearly all the company’s vendors sought cash in advance before shipping products, and Toys ‘R’ Us was forced to scramble to raise $1 billion for suppliers.
The retailer said it has received a commitment for more than $3 billion in debtor-in-possession financing from lenders, including a JPMorgan-led bank syndicate, as well as existing lenders.
The company has 64,000 employees and nearly 1,600 stores, which it plans to continue operating as usual.
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