Toys ‘R’ Us Inc, the largest U.S. toy store chain, filed for bankruptcy protection on Monday.This is the latest sign of turmoil in retail industry caught in a viselike grip of online shopping and discount chains.Toys ‘R’ Us said it received a commitment for over $3billion in debtor in possession financing from lenders including a JPMorgan-led bank syndicate and certain of the company’s existing lenders.The new financing, subject to court approval, is expected to immediately improve the company’s financial health and support its ongoing operations during the court-supervised process, Toys ‘R’ Us told.
The company’s Canadian unit intends to seek protection in parallel proceedings under Companies’ Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice, Toys ‘R’ Us told in a statement.The retailer’s operations outside of the United States and Canada, including about 255 licensed stores and joint venture partnerships in Asia, which are separate entities, are not part of Chapter 11 filing and CCAA proceedings, Toys ‘R’ Us said.The filing is among the largest ever by a specialty retailer and casts doubt over future of the company’s nearly 1,600 stores and 64,000 employees worldwide. It comes just as Toys ‘R’ Us is gearing up for the holiday shopping season, which accounts for the bulk of its sales.Toys ‘R’ Us filed the petition in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, Virginia.The company has not shown a net quarterly since 2013, reports Bloomberg.
The first Toys ‘R’ Us opened in 57′ and its inaugural CEO, Charles Lazarus, presided over the company until 94′. The company was bought out in 2005. In the process, it was saddled with major debts that it has never paid off. The company experienced some renewed success under CEO David Brandon, who since 2015 has sought to make Toys ‘R’ Us destination for children that it once was, but the changes ultimately proved futile in the face of online retailing industry.Toys ‘R’ Us has more than 800 locations in the United States and has stores from the United Kingdom to Japan.