Toys "R" Us Preparing To Liquidate

Less than 6 months after Toys "R" Us shockingly filed for Chapter 11, its bonds tumbling from par to pennies on the dollar in under a month...

... the once iconic toy retailer is set for the dust bin of history, and having failed to find a buyer in bankruptcy court is preparing for the final indignity: liquidation.

As Bloomberg reports in describing the "fluid situation" at Toys, a winding down of the US division has become increasingly likely in recent days according to "people, who asked not to be identified because the information is private." And with every passing day, hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring.

The toy chain, which was LBOed for $6.6 billion in 2005 by KKR, Bain Capital and Vornado Realty Trust, entered bankruptcy in September due to unsustainable leverage, the speed of its failure taking even the most seasoned professionals by surprise. Its goal was to emerge as a leaner business, with fewer stores, a more sustainable debt load, and the ability to fight of Amazon and other online retailers. It had secured a $3.1BN DIP loan to keep it funded throughout bankruptcy, but Toys “R” Us’s results deteriorated drastically and even more than expected during the holidays, casting doubt on the chain’s viability.

Meanwhile, as Bloomberg adds, the situation has also deteriorated for many of the retailer’s overseas divisions, which weren’t part of the bankruptcy.

Toys “R” Us’s U.K. unit put itself in the hands of a court administrator after talks to sell the business fell apart. Its European arm is seeking takeover bids. And talks are being held tooffload the growing Asian business, the company’s most profitable arm. It’s not yet clear what will happen to the Canadian unit, which filed at the same time as the U.S. division.

And so, Jeff Bezos' unstoppable juggernaut claims yet another casualty, one which may have taken the shortest possible from Chapter 11 to Chapter 7.


brushhog Thu, 03/08/2018 - 16:51 Permalink

Kind of sad. As a kid going to Toys r Us was like a mini trip to disney world. Kids DREAMED of going to toys r us. We cleaned our rooms, did our homework, cleaned our plates, and brushed our teeth all for the promise of a saturday trip to toys r us in the family station wagon.

aelfheld Thu, 03/08/2018 - 16:51 Permalink

[...] LBOed for $6.6 billion in 2005 by KKR, Bain Capital and Vornado Realty Trust [...]


KKR seems to be a bit too experienced in taking functioning companies straight to the ash heap.


Just ask TXU.

snblitz Thu, 03/08/2018 - 17:08 Permalink

When Amazon showed up Sears was well placed to compete, but never tried.

Toy's R Us did not try either.

I assume in both cases this was done (or more exactly not done) because the companies were operated by people with no idea what they were doing.

Or perhaps the people operating the companies had goals different from running a successful business?

TheObsoleteMan snblitz Thu, 03/08/2018 - 17:35 Permalink

No, they knew there jobs better than anybody. Problem was, they were expensive "legacy employees", so they were retired. Sears brought in new people who would work for allot less, and the results proved the old adage: "You get what you pay for". Much of the old department store model is a dinosaur anyway. Management was locked into the mindset of the way business was done fifty years ago. They could not evolve or think outside the box. They just assumed everybody would be coming to the mall forever, and that was the plan. They never saw the internet as a shopping tool. These were the same people who pioneered the catalog, then canned the idea back in the 1990s. Funny, but when you think about it, that's all Amazon is; an electronic catalog that is not much different from the paper catalogs fifty years ago. I remember dialing my rotary telephone and phoning in catalog orders from Sears, Speigls, Pennys, Wards, etc, and in a few days my order would come in the mail, or I could pick it up at the local store for free. Bezos didn't do anything new, he just brought back catalog shopping!

In reply to by snblitz