Toys ‘R’ Us Canada Gains Creditor Extension, Considers More Closures
Toys “R” Us Canada is currently facing a difficult period as it contemplates further store closures. During a recent virtual hearing, Ontario Superior Court Judge Jane Dietrich indicated plans to extend the retailer’s creditor protection until May. This measure allows the company to defer payments to its creditors while working on a viable strategy for its future.
Toys “R” Us Canada’s Financial Challenges
The retailer’s financial issues stem from a combination of factors including inflation, increased labor costs, and supply chain disruptions. Over the past two years, Toys “R” Us Canada has closed 53 stores and currently operates 22 locations. The company owes over $120 million to various creditors, including prestigious brands such as Lego, Hasbro, and Mattel.
Creditor Protection and Future Plans
- Judge Jane Dietrich approved an extension of creditor protection until May 2026.
- Toys “R” Us Canada seeks to potentially close more stores as it evaluates its financial strategy.
- The retailer is in talks with landlords about lease terminations for locations, including stores in Newmarket and St. Catharines, Ontario.
In essential legal proceedings, the company’s lawyers suggested that Toys “R” Us Canada needs to conduct liquidation sales to further reduce its portfolio. However, Judge Dietrich expressed caution about allowing the retailer to liquidate all remaining locations without proper checks.
Impact on Workforce
According to company filings, Toys “R” Us Canada had approximately 562 employees at the time of filing for creditor protection. Following layoffs, that number has now reduced to around 510. Over the past year, the business has terminated 180 staff members while others remain on salary continuance.
Background Information
This predicament does not come as a surprise. Toys “R” Us Canada was purchased by Putman Investments in 2021 after being saved from bankruptcy by Fairfax Financial Holdings Ltd. in 2018. Fairfax invested $300 million to rescue the retailer and its Babies “R” Us division during a turbulent financial climate.
As Toys “R” Us Canada navigates these challenging waters, it will need to rethink its operational strategies to ensure its long-term viability and possibly find a buyer in the future. The upcoming months will be crucial for the retailer as it seeks to stabilize its business operations in an evolving retail environment.
