Toys “R” Us Inc. is making preparations for a liquidation of its bankrupt U.S. operations after so far failing to find a buyer or reach a debt restructuring deal with lenders, people familiar with the matter said.
While the situation is still fluid, a shutdown of the U.S. division has become increasingly likely in recent days, said those people, who asked not to be identified because the information is private, the Los Angeles Times reported Friday. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, the informants said.
The toy chain’s U.S. division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt. A new $3.1 billion loan was obtained to keep the stores open during the turnaround effort, but results worsened more than expected during the holidays, casting doubt on the chain’s viability, according to The Times.
The situation has also deteriorated for many of the retailer’s overseas divisions, which weren’t part of the bankruptcy, according to the newspaper. Toys “R” Us’s U.K. unit put itself in the hands of a court administrator after discussions about selling the business fell apart. Its European arm is seeking takeover bids.
Talks are being held to offload the growing Asian business, the company’s most profitable arm, The Times reported. It’s not yet clear what will happen to the Canadian unit, which filed at the same time as the U.S. division.
The company, which is headquarter’ed in Wayne, N.J., began the year with more than 800 stores in the U.S. under both the Toys “R” Us and Babies “R Us brands. In January, it announced the shuttering of 180 locations.ember, Toys “R” Us sales declined 5 percent.
—City News Service