Toys R Us file for Bankruptcy

Toys “R” Us Inc.  the second-largest toy seller in the US behind Amazon, filed for bankruptcy as the retailer, loaded with debt in a buyout more than a decade ago, failed to keep consumers from abandoning its stores for the lower prices and convenience of online shopping. The move puts the future of its 1,600 stores and 64,000 workers in doubt.

The company listed debt and assets of more than $1 billion each in Chapter 11 documents Monday in U.S. Bankruptcy Court in Richmond, Virginia. Prior to filing, the chain secured more than $3 billion in financing from lenders including a JPMorgan Chase & Co.-led bank syndicate and certain existing lenders to fund operations while it restructures, according to a company statement. The funding is subject to court approval.

The company didn’t announce plans to close stores, and said its locations across the globe would continue normal operations.

“Like any retailer, decisions about any future store closings – and openings – will continue to be made based on what makes the best sense for the business,” Michael Freitag, a spokesman for Toys “R” Us, said in an email.

The bankruptcy filing is the latest blow to a brick-and-mortar retail industry reeling from store closures, sluggish mall traffic and the threat of using the Chapter 11 process to close underperforming stores and expand online operations.

The Credit Protection Association says this is a stark reminder that you need to be aware of your credit risk, no matter who you deal with. Credit Management is a must, even if you deal with so called blue chips like Toys R us.

James Salmon

19th September 2017

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