Toys R Us has said at a bankruptcy court hearing that it is working hard to maximise payments to suppliers and lenders as it starts to shutter stores across the US.
More than 50 suppliers, including Mattel and LEGO, have objected to the proceedings by the retailer to liquidate its US business, putting 30,000 jobs at risk.
Toys R Us has been trying to reorganise under US Chapter 11 bust last week said those efforts had failed and it was quickly running out of cash. It is also closing down its UK operations but looking for a buyer for Canada, Europe and Asia.
Some trade vendors are now demanding the company return any unpaid inventory rather than selling it and using going out of business sales to pay secured lenders and bankruptcy lawyers, at their cost, court papers have showed.
“We are making every effort to make sure trade vendors will be paid in full” Lazard’s David Kurtz, who is advising Toys R Us testified at a hearing at US Bankruptcy Court in Richmond, Virginia.
The company is seeking approval for a March 26 deadline for bids for each of its foreign businesses, minus UK, followed by an auction on March 29.
It is also seeking approval for a series of US liquidation procedures including a halt to more than $450 million in supplier payments.
Under trade agreements, vendors were required to ship goods to Toys R Us on unsecured trade credit.
In a court filing, LEGO said any ‘wind down must be implemented in a manner that is fair and equitable to all’ of the company’s creditors.