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The thought of Toys ‘R’ Us closing stores due to its recent bankruptcy filing is too much for one nine-year-old to bear, according to court papers, Reuters reported. In a handwritten letter entered on Monday in the bankruptcy docket of the largest U.S. toy store chain, the child argued store closings “will be bad for kids” and would leave them “very unhappy.” The retailer’s stores are special for children, who “would rather be promised a trip to Toy ‘R’ Us than any other store,” the child said in the letter to Bankruptcy Judge Keith Phillips, who is overseeing the bankruptcy case. The letter identifies the child only as Andrew. The child’s last name was blacked out. Toys ‘R’ Us filed for chapter 11 protection earlier this month to restructure $5 billion of its long-term debt. It did not, however, file with plans for store closures as has been typical of many retailers that have sought to restructure or liquidate in court in recent years. Read more.

What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17. 

Warrendale, Pa.-based teen retailer rue21 announced on Friday that it had emerged from chapter 11 protection, the Pittsburgh Business Times reported. The announcement follows several months of work on financial restructuring since rue21 filed for voluntary chapter 11 reorganization on May 15. The restructuring plan was approved on Sept. 11 by the U.S. Bankruptcy Court for the Western District of Pennsylvania in Pittsburgh. The company has 758 stores in 45 states.

J. Crew Group Inc. averted a bankruptcy filing this summer when it convinced bondholders to do a debt swap that tapped the value of its brand name, the Wall Street Journal reported today. A majority of the struggling retailer’s bondholders agreed to the swap, but the deal angered a few of its lenders, who saw the valuable brand name stripped away from the collateral backing their loans. They sued to block the deal, but so far their efforts have faltered. J. Crew, for its part, says that it is simply taking advantage of covenants in its debt documents that allow the company to do such a deal. Distressed-debt exchanges aren’t unusual for companies that are struggling with heavy debt loads, but the J. Crew deal has raised concern among high-yield investors because it effectively pushes J.Crew’s junior bondholders to the front of the line of creditors, ahead of term-loan holders, who were in a superior position before the debt exchange.

Toys “R” Us Inc. Chief Executive David Brandon said that the toy retailer will shrink its stores and revamp its bigger outlets through its bankruptcy process, which may end with the company’s return to the public markets, Reuters reported yesterday. Toys “R” Us, the largest specialty U.S. toy seller, filed for bankruptcy on Monday after some of its vendors stopped shipping to them. They were concerned the company would not pay them because of its financial distress, but those worries were put to rest once Toys “R” Us secured bankruptcy financing on Tuesday. Brandon, in detailing Toys “R” Us’ turnaround, dubbed “Project Sunrise” by the company, said that the chain will integrate its online and in-store shopping experiences, adding faster shipping and better technology and customer service. He said the chain’s 64,000 workers would see wage increases, too. Read more. 

In related news, Toys “R” Us Inc. said today that it is hiring part-time seasonal workers to staff its stores for the holidays, including for a new position of toy demonstrator, Reuters reported. The move is the clearest sign yet that Toys “R” Us is aiming to capitalize on the key holiday shopping season to emerge from bankruptcy and escape liquidation. The largest U.S. toy chain did not disclose the number of people it planned to hire nationwide, although its announced openings for seasonal jobs in some of the biggest U.S. states exceed 12,000 part-time jobs. The company currently employs approximately 64,000 people. Read more. 

What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17. 

Toys “R” Us Inc has been making $400 million in interest payments on its debt every year, largely due to its $6.6 billion leveraged buyout in 2005, Reuters reported yesterday. This week, it succumbed to its debt burden, leading to the biggest bankruptcy of a U.S. retailer since that of Kmart in 2004. The largest U.S. toy retailer’s decision to file for chapter 11 bankruptcy protection on Monday took investors by surprise, given that the company faced no imminent debt maturities and had managed to overcome financial stress in the past by securing concessions from its creditors. But the company’s ability to kick the can down the road had become exhausted. The bankruptcy filing was the culmination of an unsuccessful seven-month effort by Toys “R” Us to find relief from its $5.2 billion debt pile, according to bankruptcy court filings and people familiar with the deliberations. Read more. 

What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17. 

Sears Canada Inc.’s top executive is negotiating a private-equity-backed deal for a slimmed-down version of the insolvent retailer, the Wall Street Journal reported today. The proposed offer could be valued at more than 650 million Canadian dollars ($533 million) and would slash the company’s store footprint by more than half. But it could preserve at least 8,000 jobs while paying off bankruptcy loans provided by Wells Fargo Capital Finance Corp. and GACP Finance Co., these people said. The company’s executive chairman, Brandon Stranzl, told employees last month he was preparing an offer designed to save at least part of Sears Canada from liquidation. It filed for protection from creditors in June under the Companies’ Creditors Arrangement Act — Canada’s equivalent of chapter 11 bankruptcy — after operating at a loss since 2014. His deal would be financed partly through private-equity capital sourced by Vadim Perelman, the founder of Los Angeles-based Baker Street Capital Management, and partly with debt financing. The restructured Sears Canada would also assume liabilities associated with employees and retail leases, some of which may be renegotiated.

Toys ‘R’ Us Inc. filed for chapter 11 bankruptcy protection yesterday, undone by a hefty debt load and the rapid shift to online shopping, the Wall Street Journal reported today. As part of the restructuring process, Toys ‘R’ Us plans to close some underperforming stores. Its remaining locations would be reconfigured to be more experienced-based, incorporating amenities such as in-store play areas. The company expects most of its stores will be open for the holidays and it will use $3 billion in bankruptcy financing to continue buying merchandise and funding its operations. The company, which operates about 1,600 stores around the world, was a classic example of a “category killer,” a huge specialty store with low prices that squeezed independent shops. It swallowed up several rivals that have themselves filed for bankruptcy protection, including FAO Schwarz and Kay Bee Toys, a mall-based chain that liquidated hundreds of stores before it was sold. 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. 

Of at least 10 merchants to file for chapter 11 protection from creditors in the past year, four are taking the trip to bankruptcy court for the second time in as many years, Bloomberg News reported on Friday. After struggling to boost earnings after the financial crisis, retailers have been battered by declining foot traffic, the rise of big-box stores and the growing clout of Amazon.com. Many were further encumbered when they took on debt to fund private equity-sponsored acquisitions. The existence of repeat filers points not only to the depth of the retail crisis, but also to the tensions at play in any restructuring. “Unfortunately, there’s a natural pressure to over-lever a company coming out of bankruptcy,” said Keith Maib, a senior managing director at turnaround advisory firm Mackinac Partners. “The old holders want to continue to be debt holders,” he said, which makes it difficult for a company to reduce the amount of money it owes. Data from the UCLA-LoPucki bankruptcy research database show that of 66 retailers that filed for chapter 11 since 1979, only 40 emerged, with the rest liquidating their assets in the court process. Of those that did survive, 19 eventually ended up back in court.

The maker of Aerosoles flexible-sole footwear filed for bankruptcy as it looks to sell or refinance around its e-commerce unit, Bloomberg News reported on Friday. AeroGroup International, established in 1987 through a buyout of a Kenneth Cole division, estimated around $109 million in debt as of Friday’s chapter 11 filing, and said that it plans to continue evaluating store closing. It operates 78 stores across the U.S., after closing around 30 in 2016. The New Jersey-based footwear maker seeks a proposal to buy or finance a business around its wholesale and e-commerce units. “Declining mall traffic, a highly promotional and competitive retail environment, and a shift in customer demand and preference for online shopping versus the traditional brick and mortar environment” all contributed to Aerosoles’s declining fortunes after more than 30 years of profitable operations, Mark Weinstein, the company’s chief restructuring officer, said in a court filing. The company said it wants a proposal within 60 days to exit chapter 11 by the end of the year.

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.