America's largest toy stores chain, which has around 1,600 stores worldwide and almost 65,000 employees, said most of its shops remained profitable and would operate "as usual" while it looks to restructure a 5.6 billion United States dollar (£3.6 billion) debt mountain.
Aside from collaborating with debt holders and creditors to work on the debt, the other objectives of Toys "R" Us are to improve its customer service online and in physical stores and to fortify its place in the competition as more changes and challenges emerge in the global retail industry. The company announcement also said separate operations outside the USA and Canada are not part of the filings.
A recent announcement from Toys R Us that it is filing for Chapter 11 bankruptcy protection may have some shoppers spooked.
The company is saddled with debt from a $6.6 billion buyout in 2005 led by KKR & Co LP and Bain Capital LP, together with real estate investment trust Vornado Realty Trust.
With the possible business restructuring in mind, the bankruptcy filing may have placed at around 64,000 positions in the company at risk of job cuts, Daily Express reported. Its Canadian subsidiary also sought creditor protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice Tuesday. "If they ship blindly to Toys "R" Us they could be on the wrong side of a receivership and go to the back of the line when it comes time to get paid". Amazon and Toys "R" Us settled the case in 2009.
Just because a company files for Chapter 11 protection, that doesn't mean it will be closing its doors. As of last night, Toys R Us isn't one of them. Walmart, the largest toy store in the country, claimed the second spot online with almost $1.3 billion.
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Toys "R" Us Inc.is the biggest USA toy store chain and it has lodged for bankruptcy indemnity.
Hasbro Inc., the maker of Play-Doh and Transformers and My Little Pony toys, said it was declining to comment while it's "in the process of evaluating the terms of the Toys R Us bankruptcy filing and until we have a full understanding of the terms and their impact to Hasbro". It hasn't worked. Neither have its big bets on licensed toys from movies like "Star Wars" and "Lego", as the Wall Street Journal noted.
Will Toys "R" Us stick around in Canada?
Yes. Your "R" Us Credit Card will continue to be accepted.
Toys "R" Us filed now because 40 percent of its vendors stopped shipping, unless they received cash on delivery. If you're totally anxious about the company's prospects, there are lots of places to buy toys and be confident you can return them after the winter holiday if your niece really wanted a stuffed tiger instead of a giraffe. USA toy sales rose 6 per cent last year on top of a seven per cent increase in the prior year, says NPD Group Inc., a market research firm.