Toy store chain Toys R Us Inc. announced on Tuesday that it has filed for Chapter 11 bankruptcy protection.
The Wayne, N.J.-based company plans to work with its creditors to restructure the $5 billion of long-term debt on its balance sheet. The restructuring will provide the company with greater financial flexibility to invest in its business, improve customer experience in physical stores and online, and strengthen its position in an increasingly challenging, rapidly changing retail marketplace worldwide.
“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 Dave Brandon, chairman and CEO of the company.
The chain’s approximately 1,600 Toys R Us and Babies R Us stores across the globe, including those in Yorktown, Yonkers, White Plains, Norwalk, Danbury and its websites, toysrus.com and babiesrus.com, will continue to operate as usual.
The company intends to seek protection in parallel proceedings for its Canadian subsidiary. Its operations outside of the U.S. and Canada are not part of the bankruptcy.
Toys R Us has received a commitment for more than $3 billion in financing from lenders, including a JPMorgan-led bank syndicate. Subject to court approval, the company expects that financing to “immediately improve its financial health” and support its ongoing operations.
The retailer also plans to work with its vendors to ensure inventory levels are maintained and products continue to be delivered in a timely fashion.
Kirkland & Ellis LLP is serving as principal legal counsel to Toys R Us, Alvarez & Marsal is serving as restructuring adviser and Lazard is serving as financial adviser.
For more information, visit the company’s restructuring website.