Toys R Us is facing bankruptcy…can anyone save this company?

Toys R Us is facing bankruptcy…can anyone save this company?

Sep 10

When I was a kid, I used to love to go shopping at Toys R Us, but I rarely find myself in Toys R Us anymore since I don’t have children yet. I’m looking forward to the day, however, when I can take my kids to a Toys R Us and see their faces light up at all the options they have!  That is if there is even a Toys R Us around by the time I have children. With Amazon and online shopping, Toys R Us is struggling to get back on its feet and is looking at bankruptcy contingency plans.

Forbes writes that Toys R Us is looking for investors to help them look at financing programs. The store has been struggling to increase its balance sheet for about twelve years now. They had a $6.6 billion buyout by investor groups: KKR, Bain Capital, and Vornado Realty Trust. Since their filing, Toys R us has not had a lot of consumers purchasing there. This could also be responsible for online shopping trends. Amazon Inc. carries the same toys and products that Toys R Us sells for a significantly better price. Toys R Us, over $5 million in debt, is trying to refinance and bounce back. This year, Toys’ R Us is continuing to decline. The company’s debt will be increased by $2.6 billion by 2019. The company has hired advisors to help them figure out a plan of action. This could include closing some stores that are not doing well or finding better management and marketing sales. These investors are responsible for acknowledging some international options. They plan to join a conversation that could help them secure deals with potential investors, which could take out $400 million in debt if they are successful. This could help 2018 debts they can anticipate which fall under debtor-in-possession classes. These loans help sponsor and soften the bankruptcy process. Because of the debt loads, the chance to acquire more capital would need to be secured by assets. However, because the company already has many debt agreements, this limits the company’s ability to secure new debt. One entity, the Taj entity, holds 3.6 times the leverage and could offer liens on the international assets. This could make them useful for liability management. Stakeholders of the company own about 12% of the company’s secured notes, which was devised last year from previous engagements that hope this new debt will provide a solution with international assets.

The company has hired advisors to help them figure out a plan of action. This could include closing some stores that are not doing well or finding better management and marketing sales. These investors are responsible for acknowledging some international options. They plan to join a conversation that could help them secure deals with potential investors, which could take out $400 million in debt if they are successful. This could help 2018 debts they can anticipate which fall under debtor-in-possession classes. These loans help sponsor and soften the bankruptcy process. Because of the debt loads, the chance to acquire more capital would need to be secured by assets. However, because the company already has many debt agreements, this limits the company’s ability to secure new debt. One entity holds 3.6 times the leverage and could offer liens on the international assets. This could make them useful for liability management. Stakeholders of the company own about 12% of the company’s secured notes, which was devised last year from previous engagements that hope this new debt will provide a solution with international assets.

Toys R Us is still fighting to be in the toy industry and compete with others such as Amazon and Walmart. I don’t think Toys R Us will be around by 2030 at this rate, if not sooner. The trend has shifted toward online shopping and iPhones, and iPhone apps/games are replacing the toys that Millenials loved and enjoyed. I would like to learn more about the investor’s plans into Toys R Us and their belief in the store’s vision and industry in the future, but I am unsure if they will last much longer at this pace. It just goes to show that in tough times, individuals and companies alike must consider bankruptcy, and corporate bankruptcy tends to be far different than personal bankruptcy, based on some of the research I did look up local bankruptcy lawyers near me. I did find a few great websites like this one here, and I learned quite a bit about the bankruptcy process!