Toys R Us prepares for liquidation of US operations

Toys R Us is making preparations for a liquidation of its bankrupt US operations after failing to find a buyer or reach a debt restructuring deal with lenders.

According to people close to the matter, the situation is still fluid, but a shutdown of the US division has become increasingly likely in recent days.

Hopes are now fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring.

Toys R Us entered bankruptcy in the US in September 2017 with plans to emerge with a leaner business model and more manageable debt. A new $3.1bn loan was obtained to keep the stores open during the turnaround effort, but Christmas sales fell short.

The latest development for the retailer follows last week’s news that its UK division had entered administration, while its European arm is currently seeking takeover bids as talks are being held to offload the growing Asian business, the retailer’s most profitable arm.

Of course as the news broke from the US overnight, shares in the world’s biggest toymakers have dropped. Mattel fell as much as 6.1 per cent, while Hasbro declined by three per cent.

The liquidation of Toys R Us would present a significant blow to the US toy industry, responsible for bringing in around 15 per cent of US toy revenue.

The downfall of Toys R Us can be largely traced back to a $7.5billion leveraged buyout in 2005, when Bain Capital, KKR and Co and Vornado Realty Trust loaded the company with debt

The company entered this year with more than 800 stores in the US, under both Toys R Us and Babies R Us. In January it announced the shuttering of 180 locations.

About Robert Hutchins

Robert Hutchins is the editor of and ToyNews. Hutchins has worked his way up from Staff Writer to the position of Editor across the two titles, having spent almost eight years with both ToyNews and, and what now seems like a lifetime surrounded by toys. You can contact him by emailing or calling him on 0203 143 8780 You can even follow him on Twitter @RobGHutchins if ranting is your thing...

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