Toys ‘R’ Us Canada Sued for Millions Over Unpaid Rent

Toys “R” Us Canada is currently embroiled in litigation, facing multiple lawsuits from various landlords. These lawsuits collectively amount to $31.3 million in unpaid rent and associated damages. The legal actions arise from claims that the toy retailer neglected to pay rent for several of its locations in 2024 and 2025. Prominent landlords involved include RioTrin Properties, part of the RioCan Real Estate Investment Trust, and Calloway Real Estate Investment Trust.

Lawsuit Details and Locations

The lawsuits target multiple properties situated in various regions, including:

• Saint John, New Brunswick
• Belleville, Ontario
• Oakville, Ontario

Many of the stores linked to these lawsuits have already closed. Toys “R” Us Canada has significantly reduced its store count, which now stands at approximately 40 locations. The legal claims have yet to be adjudicated in court.

Challenges Faced by Toys “R” Us Canada

A spokesperson for the retailer declined to comment on the legal disputes. Experts indicate that the company is experiencing ongoing difficulties, leading to widespread store closures. Jenna Jacobson, director of the Retail Leadership Institute, emphasized the uncertainty surrounding the retailer’s future, questioning whether it can maintain a physical presence or will shift entirely online.

Compounding Factors

Several key factors contribute to the challenges faced by Toys “R” Us Canada:

• Transition to online shopping.
• Increased competition from major retailers like Amazon and Walmart.
• Consumer spending cutbacks across Canada.

These elements have made the toy retail landscape notably more challenging, as lease payments become burdensome amid declining sales and store performance.

Allegations Regarding Rent Payments

The lawsuits allege that once Toys “R” Us Canada failed to remit its monthly rent, landlords initiated communication regarding potential lease terminations. According to the legal documents, persistent non-payment led to the termination of leases, prompting landlords to file lawsuits. The claims suggest that the retailer owes not just the missed month’s rent but also subsequent payments.

In some lease agreements, failure to meet rent obligations triggers conditions requiring the business to pay the next three months’ rent upfront and additional fees.

Company Management and Operational Changes

Toys “R” Us Canada is currently managed by Putman Investments, based in Ancaster, Ontario. The company acquired the retailer in 2021, with a well-documented history of reviving struggling businesses. When Putman Investments took over, the company had 81 stores but has since undergone numerous closures.

In an effort to innovate, the company has introduced new concepts like Playlab, but the overall effectiveness of these redesigns remains uncertain.

Current Status and Future Prospects

As of now, several locations within Primaris and QuadReal Property Group portfolios are reportedly closing due to similar unpaid rent issues. The company’s financial struggles have also been compounded by recent concerns, including a data breach and a temporary halt on online sales to facilitate performance improvements.

Retail experts, like Jacobson, point out that although the toy market itself is not collapsing, the operating dynamics are increasingly difficult. The future of Toys “R” Us Canada remains unclear as the company navigates its financial and operational challenges.