Toy store chain Toys ‘R’ Us Inc announced on Monday that it had filed for bankruptcy protection in the United States and Canada in an effort to restructure its debt of $5 billion (more than Rs 3,000 crore).
It joins over a dozen other retail chains that have filed for bankruptcy in the US this year, reported Reuters. Toys ‘R’ Us’ large network of shops are seen as a burden as customers switch to online shopping. Many major retailers, including Macy’s and Sears Holding Corp, have closed hundreds of outlets in their struggle to compete with discount stores like Walmart and online retailers like Amazon.
Toys ‘R’ Us has filed for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court in Richmond, Virginia, while its Canadian subsidiary will seek protection in parallel proceedings under the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice.
With these proceedings, Toys ‘R’ Us intends to “restructure its outstanding debt and establish a sustainable capital structure that will enable it to invest in long-term growth”, the company said. Most of its 1,600 stores across the world are profitable, and only those in North America are a part of these court filings, it said.
“Today marks the dawn of a new era at Toys ‘R’ Us, where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” said the company’s Chairperson and Chief Executive Officer Dave Brandon.