Toys "R” Us, which hoped to restructure about $5 billion in debt and continue as a mainstay toy business, is preparing to liquidate its U.S. stores and drop efforts to restructure. Photo: Eric Gay/Associated Press
Paul Ziobro and
Troubled toy chain Toys “R” Us Inc. is preparing to liquidate all of its U.S. stores and abandon efforts to restructure through the bankruptcy process, people familiar with the matter said, after a weak holiday season torpedoed plans to reorganize.
The big box retailer filed for chapter 11 protection in September with the hopes of reorganizing its roughly $5 billion debt load, revamping its stores and operations, and continuing as a mainstay toy business.
The company recently announced plans to close 184 stores, or about 20% of its roughly 800 U.S. stores, as it worked with creditors to restructure its debts. But now it is now evaluating bids to liquidate the remainder of its U.S. locations, the people said.
An announcement could come as soon as Monday when the parties are expected to appear at a bankruptcy hearing in Richmond, Va., the people said. How much Toys “R” Us decides to liquidate will depend on the size of the liquidator bids it receives, the people said.
The retail industry is undergoing another major shift -- to e-commerce. How did we get here? Photo: Associated Press
The plan to shut down the stores and liquidate the U.S. operations is one of several scenarios in play, one of the people said, and while some lenders are pushing that route, others want to find other options for Toys “R” Us to continue operations.
Toy manufacturers have grown anxious over losing the retailer, which is a key selling channel that carries a much larger breadth of their products than the likes of Target Corp. and Walmart Inc. Some smaller companies have also been worried about lenders pulling lines of credit if the Toys “R” Us goes away.
The company, which had more than $11 billion in annual revenue, has struggled with losses, a hefty debt load and the rapid shift to online shopping. It was taken private in 2005 for $6.6 billion in a leveraged buyout by Vornado Realty Trust , Bain Capital and KKR & Co.
News the Wayne, N.J., company was exploring a liquidation of its U.S. operations was earlier reported by Bloomberg News.
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