Toy Company Files For Bankruptcy

Sep 20, 2017

Toys “R” Us filed for bankruptcy on Monday. The company blamed debt and “a tough environment for bricks and mortar stores.” The company is seeking to restructure its $5 billion in long-term debt and create a capital structure that will allow it to grow. Lenders have agreed to pump more than $3 billion into the company. The added liquidity will allow the company to remain solvent for the crucial Christmas season “and support its ongoing operations during the court-supervised process.” During the first quarter of 2017, the company lost $164 million. It blamed “weakness in the baby category and slowing toy sales.” In 2000, Toys “R” Us partnered with Amazon to sell its toys but the deal was terminated four years later after the company sued Amazon for violating the terms of the deal. During the time of the deal, Toys “R” Us failed to create its own internet presence which has come to haunt the company. Lesson: Never rely on a sales platform that you don’t own.