A retail powerhouse is announcing that it has filed for Chapter 11 Bankruptcy.
In a press release this week, Toys ‘R’ Us announced that the company and certain of its U.S. subsidiaries and its Canadian subsidiary have voluntarily filed for the financial relief in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, VA.
The company explained it plans to use the court-supervised proceedings to ‘restructure its outstanding debt and establish a sustainable capital structure that will enable it to invest in long-term growth and fuel its aspirations to bring play to kids everywhere.’
Despite the filing, officials note the company’s approximately 1,600 Toys ‘R’Us and Babies ‘R’ Us stores around the world – the vast majority they say are profitable – are continuing to operate as usual.
No store closures have been announced at this time. Officials add that customers can also continue to shop for the toy and baby products they are looking for online on the Company’s newly launched www.toysrus.com and www.babiesrus.com web stores.
Customers reportedly can also expect the Company’s loyalty programs, including its Rewards ‘R’ Us, Geoffrey’s Birthday List and Babies ‘R’ Us Registry, to continue as normal.
“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, Chairman and Chief Executive Officer. “Together with our investors, our objective is to work with our debt-holders 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. 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.”
Mr. Brandon continued, “As the holiday season ramps up, our physical and web stores are open for business, and our team members around the world look forward to continuing to put huge smiles on children’s faces. We thank our vendors for their ongoing support through this important season and beyond. We also appreciate the strong support our investors have provided over time and the constructive role they are playing in this process that will allow us to create a brighter future for our company. And as importantly, we thank our team members in advance for their hard work and dedication to serving the millions of customers who will shop with us this holiday.”
The Company has received a commitment for over $3.0 billion in debtor-in-possession (“DIP”) financing from various lenders, including a JPMorgan-led bank syndicate and certain of the Company’s existing lenders, which, subject to Court approval, is expected to immediately improve the Company’s financial health and support its ongoing operations during the court-supervised process.
Michaela Madison Reporting