Toys R Us has gone into administration in the UK leaving 3,000 jobs at risk. The U.S. toy chain failed to find a buyer after struggling for months to compete with online retailers.
Toys R Us, the toy superstore chain that became a dream factory for kids nationwide, filed for bankruptcy liquidation early Thursday, a move that will likely lead to the closure of all its stores and sale of all remaining merchandise.
The company’s main creditors “have determined that the best way to maximize their recoveries is to liquidate the existing inventory in all…735 remaining U.S. stores and begin an orderly wind-down of the U.S. operations.”
Toys R Us had initially hoped to be able to keep 400 stores open, according to the court filing, but realized it didn’t have enough cash to keep that many stores open. “Projected cash burn” according to the motion, was $50 to $100 million a month, without even investing in any of the planned improvements to stores.
It said, however, in the filing that it still hoped that 200 stores in the U.S. could be preserved in combination with its Canadian stores. it said is seeking a buyer for the Canadian operation.
“The stark reality is that the Debtors (Toys R Us) are projected to run out of cash in the U.S. in May 2018,” the motion states.
The move came after Toys R Us told employees Wednesday that it is planning to sell or close all of its U.S. stores, and that it will file liquidation papers in advance of a court hearing scheduled for Thursday afternoon.
CEO Dave Brandon had shared the news with employees in a conference call. A spokeswoman for Toys R Us said Brandon told employees it was a sad day and that customers and others would be sad to see the brand disappear.
The decision to liquidate the company might not be the final chapter if a buyer surfaces who wants to buy some of the stores and operate them as an ongoing business. Many in the toy business believe there is room for a smaller version of Toys R Us.
Reports that Toys R Us was heading for a complete liquidation of its U.S. operations have been circulating for the past two weeks, with major news outlets citing sources familiar with the negotiations to keep the retailer alive.
In January, Toys R Us announced plans to close up to 182 of its U.S. stores, including 11 in New Jersey. It began going-out-of-business sales at those stores in February.
Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!