Toys 'R' Us Filing For Bankruptcy, Are We Welcoming The iPad Domination?

Toys 'R' Us bankruptcy fears hit Mattel and Hasbro

A Toys "R" Us store in Pasig City. In the meantime, Toys "R" Us isn't planning to close any stores, but rather, the company is hoping to reform itself to move forward and become more viable on the market.

Toys "R" Us Inc, which has 1,600 stores in 38 countries and 64,000 employees, said its hand was forced after an attempt to restructure out of court sparked a press report about a potential bankruptcy, spooking critical vendors and credit insurers.

Late Monday, Toys "R" Us announced that it scrounged up $3 billion in bankruptcy financing, which it plans to use to restructure the company, alleviate its debt burden and revamp its stores.

Toys R Us' Canadian subsidiary intends to seek similar protection under the Ontario Superior Court of Justice's CCAA.

BBC reported that a USA bankruptcy judge approved a loan of more than $2bn to help stabilise the toy chain so that Toys "R" Us would have time and money to prepare for the upcoming Christmas shopping season. "Unfortunately, Toys "R" Us has not responded effectively to these challenges", said Neil Saunders, managing director of GlobalData Retail.

Toys "R" Us joins a list of hundreds of companies that have succumbed to the online threat and filed for bankruptcy protection this year. An increasing number of retailers are filing Chapter 11 bankruptcies for the second time, in what the industry is calling "Chapter 22" bankruptcies (as in 11 + 11).

In its fight to stay relevant, Toys "R" Us amassed $5 billion in debt.

Last year, the market size of traditional toys and games in Singapore was US$202.5 million, up by 1.1 per cent from 2015. The company's United Kingdom retail stores are continuing to trade as normal, with four new stores expected to open here in the United Kingdom in the run up to Christmas. The result is that many former Toys "R" Us kids have no interest in being Toys "R" Us parents.

"We are confident that we are taking the right steps to ensure that the iconic Toys" R" Us and Babies" R" Us brands live on for many generations", the company's CEO, David Brandon, said in the release.

Why did the store file for bankruptcy protection?

The company opened a temporary store in New York City's Times Square this year to capture more holiday shoppers, nearly two years after it closed its flagship store barely a block away, driven out by high rents.

"It will sell some of its commercial real estate, at least those parts of it that's marketable, to raise cash and pay creditors; and they'll buy a little time to continue in business". It operates as a separate legal entity and is financially independent from all other Toys "R" Us operating companies around the world.

Toys R Us was taken private in 2005, acquired by the investment firms Bain Capital, KKR & Co. and Vornado Realty Trust in a deal financed mostly with debt. Its shares dropped 6.6 percent.

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