Toys "R" Us To File Bankruptcy Any Minute; Bonds Crash

Over the weekend, we reported that vendors to iconic toy retailer Toys "R" Us had halted shipments over payment concerns and/or getting their receivables crammed down alongside other unsecured claims ahead of what appeared to be an imminent bankruptcy. Well, they were right, and according to Bloomberg a Chapter 11 filing by Toys "R" Us is to be expected as soon as tonight.

The latest Amazon casualty, Toys "R" Us bankruptcy filing would send America’s largest toy chain to bankruptcy court, dealing another blow to a brick-and-mortar industry that’s already reeling from store closures and sluggish mall traffic and conclude the saga of one of the last pre-crisis LBOs in which Bain Capital, KKR and Vornado Realty Trust saddled up the company with $7.5 bilion in debt.

According to Bloomberg, the retailer has already hired a claims agent meant to help administer a Chapter 11 process. What is unclear is whether the company will have sufficient liquidity to assure its vendors who have imposed an effective COD blockade on the company, to provide it with much needed holiday season merchandise. And speaking of Toys "R" Us vendors, as speculation of a bankruptcy mounted over the weekend, their shares tumbled: Mattel, the maker of Barbie and Fisher-Price, fell 6.2% while Hasbro, which makes Monopoly, Nerf and Transformers, dropped 1.7%, its biggest decrease in almost two weeks.

Predictably, as we showed on Saturday, Toys CDS has exploded as the cost of insuring the company against default surged, with prices of six-month and one-year CDS hitting record highs.

Finally, the most amusing chart is that of Toys "R" Us bonds which crashed some more on the Bloomberg report, and which were happily trading at par until just a few weeks ago, only to be shocked by the recent news report that the company had hired bankruptcy advisors, crushing all hopes that the company's maturing debt would be rolled over, as even its PE sponsors decided they had had enough.

Once the filing hits the docket officially, we look forward to updating the full list of 2017 YTD retail bankruptcies which one can probably also call "Exhibit A" in any Amazon anti-trust hearing. 

Comments

Green2Delta Mon, 09/18/2017 - 17:12 Permalink

I remember when the first one opened in Indianapolis. I got to meet Dick Butkus and Bubba Smith at the grand opening. With that unimportant shit being said; I'm surprised they lasted this long. If they do a discount sale the resellers are going to clean up. And they'll probably use Amazon to do it. Which adds some irony to the situation. 

Cautiously Pes… Mon, 09/18/2017 - 17:16 Permalink

Well, this looks like a good night / good day (depending on where you sit) to dump some serious gold contracts on the market with no regard for profit at all.  So it is written, So shall it be done.

FredGSanford. Mon, 09/18/2017 - 17:18 Permalink

I am 54 years old. I have been to Toys-r-us 7 times in my life. Not any in the last several years. Wal Mart is where I buy dart boards and basketball and floats and tennis racquet and playing cards. I had forgotten that they existed till this article came up. Not sure why anyone would go in there.

mototard Mon, 09/18/2017 - 17:30 Permalink

More evidence that folks have just run out of money and are cuttng back on everything.  "Everything" in this case includes over priced plastic electronic junk toys.

gregga777 Mon, 09/18/2017 - 17:34 Permalink

Mittens the Pussy Kitten Romney and his Bain CONporate Rape & Plunder operation killed Toys 'R Us amongst a number of other companies. And it qualified him to be the Repussican Presidential nominee in 2012 just like Carly Fiorina's plundering of H-P qualified her to be a 2016 Repussican Presidential candidate. They should go fuck each other and die horribly painful, slow gruesome deaths.

CRM114 itstippy Mon, 09/18/2017 - 18:06 Permalink

You missed out guns and pawn.The Big Three are Guns, Nails, Pawn. Take the safest possible route out of any neighborhood with all three in one mall.I came to this conclusion after a Trans America drive.Other conclusions:If you want half-decent food, find a restaurant with mostly European cars outside.Any chain hotel with a room price under $90 will have other customers you don't want to meet. Choose routes which avoid tolls and the highway patrol. Exception: I-95 is unavoidable as there is often no sensible alternative.Refuel in daytime. Keep topped up.  

In reply to by itstippy

CRM114 Robert Trip Mon, 09/18/2017 - 18:18 Permalink

I don't get the connection to Rambo.Avoiding the highway patrol is for unreasonable fines risk, nothing else.On that long drive, I do specifically recall stating to my partner that we wouldn't be stopping for gas in West Virginia. She laughed, reckoned I was paranoid. On the TV that evening, the lead story was another sniper at a West Virginia gas station. She went totally white, and I haven't had her laugh at me since.

In reply to by Robert Trip

CRM114 Mon, 09/18/2017 - 17:46 Permalink

Don't know anyone who has switched to buying toys off the internet. They just aren't buying toys any more. Kids seem to want electronic stuff for indoors, and outdoor games. Toys 'R' don't have any of that. I buy regularly for 7 kids, ages 4 to 16, and I've been in Toys 'R' twice in 5 years.Oh, and I don't think there's as much cash around these days... 

Robert Trip Mon, 09/18/2017 - 17:53 Permalink

Peep Shows and massage parlors could be  profitable viable options for these retail locations.And maybe throw a topless bar into the mix.You may have a winner on your hands.

Robert Trip Mon, 09/18/2017 - 18:13 Permalink

Walking into Toys "R' Us was similar to walking into a dollar store where the fumes from formaldehyde and cheap plastics wafted through the stagnant air to the sounds of toddlers acting up and the high pitched screeches from the women welfare bums.Not a pleasant enviroment.Give me a bar with some good drafts on tap any day.