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Toys ‘R’ Us said at a bankruptcy court hearing on Tuesday that it was working hard to maximize payments to suppliers and lenders, as it starts to shutter 735 big-box toy stores across the U.S., Reuters reported. More than 50 suppliers, including Barbie maker Mattel and Lego, have objected in some form to the proceedings by the storied toy retailer to liquidate its U.S. business, putting 30,000 jobs at risk. Toys ‘R’ Us had been trying to reorganize under U.S. Chapter 11 but last week said those efforts had failed and it was quickly running out of cash. It is also winding down its U.K business, but is looking for a buyer for operations in Canada, Europe and Asia. Some trade vendors are demanding the company return any unpaid inventory rather than selling it and using going out of business sales to pay secured lenders and bankruptcy lawyers, at their cost, court papers showed. “We’re making every effort to make sure (trade vendors) will be paid in full,” Lazard’s David Kurtz, who is advising Toys ‘R’ Us, testified at a hearing at U.S. Bankruptcy Court in Richmond, Virginia. Read more. 

One of the worst outcomes for a business owner is having a major customer file for bankruptcy and leave behind a large unpaid account receivable. ABI's Business Creditor’s Guide to Distressed Vendors, Debt Collection and Bankruptcy provides an insider’s look into the options available to help screen a business’s customers, plan for worst-case scenarios, and, if the situation does arrive, efficiently handle the fallout. 

Claire’s Stores Inc. entered bankruptcy Monday with a reorganization plan already blessed by private-equity owner Apollo Global Management and first-lien debt holder Elliott Management Corp., but at least one noteholder — Oaktree Capital Management LP — is already objecting to the proposed deal, WSJ Pro Bankruptcy reported. In a court filing and at the teen accessories retailer’s debut bankruptcy hearing Tuesday, Los Angeles-based debt investor Oaktree said holders of $240 million in second-lien notes were unfairly shut out of the negotiations, which could pave the way for first-lien creditors to take control of the company when it exits chapter 11. Oaktree owns 72 percent of the second-lien debt and said it will walk away with nothing in the proposed reorganization. Claire’s went private in 2007 in a $3.1 billion leveraged buyout led by Apollo. Apollo, which owns 98 percent of the equity and 28 percent of three different loans, is on board with the restructuring, which is aimed at cutting $1.9 billion in debt from the retailer’s balance sheet.

The collapse of Toys “R” Us Inc. is yet another blow for landlords, who now will have holes of suburban retail space up for grabs with few tenants would want them, according to a Bloomberg News analysis. The debt-laden toy chain, with more than 700 stores across the U.S., became one of the largest victims of the retail decline when it announced on Thursday that it would go out of business after a failed rescue effort. The liquidation could dump millions of square feet of real estate onto a market that’s already bloated with vacancies from retailer bankruptcies and store closures, a trend that’s been escalating as shoppers increasingly turn to the internet. Toys “R” Us has stores in all types of shopping properties — from standalone locations to community strip centers to large regional malls. Many centers are in the hands of publicly traded real estate investment trusts that lease space to the chain and may struggle with declining values for the properties. Some stores are owned by Toys “R” Us itself. How successful landlords will be in filling empty stores will depend on the quality of the properties and their locations, according to research by CoStar Group Inc. Toys “R” Us owns many of the stores in weaker areas, while GGP Inc., the second-biggest U.S. mall REIT, tends to have some of the best locations and would have the easiest time finding new tenants, according to CoStar. Somewhere in the middle are companies such as Simon Property Group Inc., GGP’s larger rival, and Kimco Realty Corp., the research firm said. Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the forthcoming ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available for pre-order at the ABI Store. 

Barring a last-minute buyer, Toys ‘R’ Us will soon disappear from U.S. shopping centers, but the name and its iconic Geoffrey the Giraffe mascot are likely to survive for another generation of Toys ‘R’ Us kids, Reuters reported. Buyers often swoop in on retailers that are going out of business and scoop up brands with an eye on maintaining ties with loyal customers, minus the bricks and mortar. “Toys ‘R’ Us — that’s a fabulous name,” said Cathy Hershcopf, an attorney who specializes in retail bankruptcies. “The jingle, the customer lists, the logo ... and the giraffe goes along with it.” Brand specialists said that they could not put an estimated value on the name, but it will be among the most valuable ever to become available through a bankruptcy liquidation. The name adorns stores in 38 countries, from Australia to Zambia.

Claire’s Stores Inc. has filed for chapter 11 protection, the girls’ accessories retailer said on Monday, as it succumbs to lower mall traffic like many of its peers, Reuters reported. Claire’s expects to reduce debt by about $1.9 billion, and said it reached an agreement with creditors including Elliott Management Corp and Monarch Alternative Capital LP, which will give the company some $575 million in new capital. Claire’s, which had over $1.3 billion in annual sales, joins several other U.S. retailers in bankruptcy as people increasingly shop online, shunning specialty brick-and-mortar stores. Claire’s has received a commitment of $135 million in debtor-in-possession financing from Citigroup, and expects to complete the chapter 11 process in September. The Hoffman Estates, Ill.-based retailer’s international subsidiaries are not part of the U.S. bankruptcy filings, Claire’s said in a statement. Read more. 

Explore various strategies on how the tough times ahead for clients in the newspaper, brick-and-mortar retail or coal industries can be addressed in a bankruptcy, whether through a restructuring or a wind-down and liquidation of the company. Make sure to attend the "Obsolescence as a Catalyst" session at the Annual Spring Meeting. 

Southeastern Grocers LLC, which operates supermarket chains Winn-Dixie and Bi-Lo, said on Thursday it is preparing to file for bankruptcy and would shutter 94 underperforming stores, Reuters reported. “We conducted a thorough review of our strategic options,” Chief Executive Anthony Hucker said. The company said that it plans to file with the U.S. Bankruptcy Court in Delaware by the end of this month. The restructuring would reduce overall debt levels by more than $500 million and help the Jacksonville, Florida-based company invest more in its business, Southeastern said, adding that it would continue to operate 582 stores.

Toy retailer Toys ‘R’ Us Inc. yesterday asked a bankruptcy court for approval to stop paying all of its suppliers while it tries to line up buyers for its international business ahead of a planned liquidation of its U.S. operations, Reuters reported. The iconic toy store’s plan to liquidate inventory and shutter or sell its U.S. stores has put 30,000 jobs at risk and left vendors wondering where to send merchandise stuck on ships and trucks, and whether their invoices will ever get paid, lawyers said at a court hearing on yesterday. As shoppers flock to Amazon.com Inc and children choose smartphones and screens over toys, Toys ‘R’ Us has struggled to boost sales and service debt following a $6.6-billion leveraged buyout by private equity firms in 2005. At a hearing at U.S. Bankruptcy Court in Richmond, Virginia, Toys ‘R’ Us lawyer Joshua Sussberg said that the company was working to avoid any contagion from the U.S. liquidation on the foreign businesses it is trying to sell. Part of that effort means separating the U.S. business from foreign operations to ensure that shipments can reach stores in Canada, Europe and Asia, where the company will be reviewing bid proposals in coming weeks. Read more. 

One of the worst outcomes for a business owner is having a major customer file for bankruptcy and leave behind a large unpaid account receivable. ABI's Business Creditor’s Guide to Distressed Vendors, Debt Collection and Bankruptcy provides an insider’s look into the options available to help screen a business’s customers, plan for worst-case scenarios, and, if the situation does arrive, efficiently handle the fallout. 

Toys “R” Us Inc. told employees yesterday that the struggling big-box retailer will sell or close all its U.S. stores, a collapse that threatens up to 33,000 American jobs in the coming months, WSJ Pro Bankruptcy reported. The 70-year-old chain, which filed for bankruptcy protection in September, has more than 700 remaining U.S. locations, including Babies “R” Us stores. It would be one of the biggest retail liquidations since Sports Authority filed for bankruptcy in 2016 with 14,500 workers and closed more than 460 stores. Chief Executive David Brandon delivered the company’s fate to workers at its Wayne, N.J., headquarters.