Toys "R" Us files for Chapter 11 bankruptcy in U.S. and Canada

Posted September 20, 2017

Toys R Us has officially announced it is filing for Chapter 11 bankruptcy protection with the hopes that the popular toy store can restructure its $5 billion in debt.

The company expects its approximately 1,600 Toy "R" Us and Babies "R" Us stores and online stores to operate as normal while the proceedings are taking place.

The Wall Street Journal stated that the company was considering filing for Chapter 11 protection in the US Bankruptcy Court.

In a statement, the company said its roughly 1,600 stores, which include Babies R Us, will remain open.

Toys "R" Us said stores outside Canada and the USA - it has 255 outlets in Asia and others in Europe, Britain and Australia - are not part of the bankruptcy filings.

Toys R Us has around $5bn worth of long-term debt on its balance sheet, a substantial chunk of which needs to be repaid next year.

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The group, which has around 1,600 stores worldwide and 64,000 employees, said its stores outside of the U.S. and Canada - including the United Kingdom and Europe, as well as around 255 licensed stores and a joint venture in Asia - were not included in the so-called Chapter 11 filing.

The retailer has filed for the bankruptcy despite leading up to the Christmas period where it records the most sales annually due to its significant debt problems.

Toys "R" Us has struggled to compete in the current market as consumers increasingly shop online with retailers such as Amazon.

Toys "R" Us (Asia) said in a statement on Tuesday (Sep 19) that it is not part of Toy "R" Us Inc's "financial restructuring" and its stores will stay open for business. Many companies use bankruptcies as a time to restructure their business.

Toys "R" Us has received a $3 billion debtor-in-possession from various financial lenders, which should improve the company's financial health and support its ongoing operations. He started a baby furniture store in Washington, D.C. prior to opening the first Toys "R" Us store in 1957.

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