Toys ‘R’ Us Inc. could file for bankruptcy as soon as the next few weeks, as nervous suppliers have tightened terms for the retailer ahead of the crucial holiday selling season, the Wall Street Journal reported on Saturday. The company, like many other big box chains, has struggled as shopping shifts online, pushing down prices and reducing store visits. In addition to shrinking sales and heightened competition, Toys ‘R’ Us has been burdened with debt from a leveraged buyout 12 years ago. The retailer has been in talks with holders of more than $5 billion in debt to extend 2018 maturities and stave off a chapter 11 filing. Still, the company and its restructuring advisers are considering filing for chapter 11 protection in the U.S. Bankruptcy Court in Richmond, Va. The potential filing would be propelled by the toy chain’s suppliers tightening trade terms, including holding back on shipments unless Toys ‘R’ Us is able to make cash payments on delivery. While Toys ‘R’ Us already has received a majority of its holiday shipments, it is still without a portion of the goods and could soon be cut off from receiving any fresh inventory. Read more. (Subscription required.)
What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17.
