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Toys R Us prepares for Chapter 7

After a long and challenging battle to internally reorganize in order to fight mounting debt, one of the most recognizable companies in America is looking seriously at shutting many of its doors for good. Connecticut residents are familiar with Toys R Us, the retail giant that has provided clothing, accessories and of course toys to young Americans for decades. The company is in the midst of preparing to file for Chapter 7 bankruptcy and plans to shut down as many as 20 percent of all stores in the United States. 

The company initially filed for Chapter 11 bankruptcy protection, which involves reallocating funding and redistributing debt in an effort to make the load more manageable. Unfortunately, the weight of that debt, coupled with attempts to upgrade flagging store locations and e-commerce options, proved too much for the giant. While it is still possible for the company to receive a last-minute reprieve from an investor, the prospects do not look favorable. 

Instead, the company is expected to file for Chapter 7 bankruptcy, a move that would see the task of liquidating its assets handed over to a bankruptcy trustee to help pay down creditors. While this report does not list Toys R Us' financial details, it seems reasonable to assume their debt is considerable. After a string of bad luck, it may be time for the company's ownership to reevaluate its options in a very serious way. 

Thankfully, Chapter 7 bankruptcy might be the best way to alleviate the debt issue. As some Connecticut business owners are already aware, Chapter 7 can make a big dent in even the largest corporate debt, sometimes clearing it altogether. Given the size and influence of Toys R Us, it may even be possible for the company to spring back from bankruptcy to once again provide joy to the children of America. 

Source: cincinnati.com, "Toys R Us liquidation: Company appears to be running out of time, money", Joan Verdon and Charisse Jones, March 9, 2018

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