Although the winter holidays are still a few months away, some people in Tyler, Texas may have already gotten a head-start on their holiday shopping. For those with children, finding the most popular toys of the season may already be on shoppers' radar. Therefore, they may be surprised to hear that the popular toy retailer Toys R Us has filed for Chapter 11 bankruptcy.
By filing for Chapter 11 bankruptcy, Toys R Us will be able to relieve itself of its debts stemming from a $6.6 billion acquisition. The company's debts total $4.9 billion. Toys R Us stores will remain operational throughout the bankruptcy process. The Chapter 11 bankruptcy filing will also give the company's toy vendors such as Hasbro and Mattel with information about its future plans as the holiday season approaches.
The company's chairman has stated that the bankruptcy filing will allow them to move forward from their debts in a way that is effective and sustainable. He feels confident that this move will allow the company to continue doing business "for many generations." By restructuring its debt, the company may have the financial opportunities needed to become profitable again.
Sometimes a company falls on hard financial times. These days, brick-and-mortar stores are seeing increased competition from online vendors. It may seem surprising that Toys R Us would file for bankruptcy so close to the holiday season, but hopefully this bankruptcy filing will be the opportunity needed to restructure its debts in a way that is not only manageable but sets the tone for a more financially sustainable future.
Source: CNBC, "Toys R Us files for Chapter 11 bankruptcy protection," Lauren Hirsch, Sept. 19, 2017