Toys “R” Us Canada Seeks Creditor Protection, Owes $120M to Vendors
Toys “R” Us Canada is seeking creditor protection as it navigates financial turmoil. The company filed for protection in an Ontario court after significant store closures and lawsuits from creditors. This move comes as Toys “R” Us Canada grapples with a myriad of financial challenges.
Toys “R” Us Canada’s Financial Challenges
In recent years, the retailer has shut down 53 locations and faces lawsuits from unpaid suppliers and landlords. As of now, the company owes approximately $120 million to its vendors and “substantial” amounts to various landlords.
Reasons for Filing
The toy retailer cited several factors behind its financial struggles:
- Inflation
- Rising labor costs
- Supply chain disruptions
- Shift toward e-commerce
Despite implementing several strategies, including staff layoffs and closing unprofitable stores, these efforts have not stabilized the business as expected.
Future Steps for Toys “R” Us Canada
Toys “R” Us Canada currently operates 22 stores. However, the company has indicated that further reductions in its physical locations may be necessary. Plans for the future may involve:
- Liquidating stores, furniture, and equipment
- Developing a sales process for remaining locations
Alvarez & Marsal will act as a third-party monitor to guide the company through this restructuring phase.
Ownership and Background
The retailer is owned by Putman Investments, which purchased it from Fairfax Financial Holdings in 2021. Putman Investments oversees several other brands, including HMV and Sunrise Records. The company has also faced challenges, including the closure of T. Kettle stores and a short-lived home goods venture named Rooms + Spaces.
Conclusion
This situation is still developing, and the direction Toys “R” Us Canada takes will be crucial for its future. The company is exploring various options to overcome its current hurdles and may soon undergo significant changes.
