Toys R Us may file for bankruptcy before the holidays: Report

The holiday season is the most important time of the year for toy stores, but Toys R Us could spend it in bankruptcy.

The toy giant might file for Chapter 11 in U.S. Bankruptcy Court in Richmond, Va., sometime before then -- and as soon as the next several weeks -- according to the Wall Street Journal.

The report cited sources saying the Wayne, N.J., chain's suppliers are behind this, because they're doing things like not shipping new items until Toys R Us can pay cash for them right away. The company, which garnered 40% of its $11.5 billion in revenues in the quarter that includes the holidays, has most of its merchandise for the season, but refreshing stock could prove problematic.

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Toys R Us declined to comment.

The holiday season is an annual bonanza for toy sellers, as millions of parents and others with children in their lives spend billions on gifts.

Toys R Us was $5 billion in debt, as of April 29. 

The company hired the law firm Kirkland and Ellis to help with the $200 million in debt due this fall and another $200 million due very close to the end of the year.

In the company's first quarter, which ended April 29, the retailer reported a net loss of $164 million and a consolidated net sales decline of $113 million.  

In 2005, private equity firms Bain Capital and KKR and the real estate investment trust Vornado took Toys R Us private in a $6.6 billion deal.

The toy titan would join a list of dozens of well-known retailers who've already filed for bankruptcy, as consumers increasingly choose to do their shopping online rather than in traditional brick and mortar stores. They include True Religion, Payless ShoeSource, Wet Seal, Gander Mountain, Gymboree and, on Friday, Aerosoles.

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© 2017 USA TODAY NETWORK


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