The sale of Toys “R” Us’s last and most valuable remaining asset, its Asia operations, has become caught up in a battle between two groups of hedge funds over the future use of the brand by stores in that region, Bloomberg News reported. One group of funds, including Cerberus Capital Management and Cyrus Capital Partners, owns notes issued by the Asian stores and would be the lead bidder for the shops. Another group, which includes Solus Alternative Asset Management and affiliates of Oaktree Capital Management, claims control over the rights to the Toys “R” Us name, because it was collateral on loans the funds had made to the company. The second group, known as the B-4 lenders, believes the Asian stores aren’t paying enough for the use of the brand and has reserved its right to sue whoever wins the auction for the shops, according to court documents. In court papers on Thursday, they asked a judge to rewrite the auction rules and argued that any bidders in the sale need to negotiate with them over how much the Asian business will pay to call itself Toys “R” Us. In their objection, the B-4 lenders used the technical language of bankruptcy law to issue a veiled warning to any bidders who try to top the $760 million opening offer made by the Cerberus group, which is known as the Taj lenders. “Bidders, therefore, will have to understand the contractual terms and causes of action in deciding how much to bid and whether to engage in direct discussions” with the B-4 lenders, the group said in its filing.
