Toys R Us – A Series Of Imprudent Events, and the Promising Story Of Its Canadian Subsidiary
NOTE: This CCAA restructuring is ongoing. This article is current as of March 30, 2018.
“Innovate or die” might explain some retail bankruptcies, but Toys R Us is a more nuanced story of “Keep servicing US$5.3bn of debt which by the way severely impacts your ability to innovate, Maintain supplier terms during the holiday inventory buildup, Don’t have all your debt maturing in a 4-year period, and Make sure nothing bad happens to your profitable Canadian subsidiary (or die).”
The last point is least covered, and today we will be focusing on Toys "R" Us (Canada) Ltd. Toys "R" Us (Canada) Ltee (“Toys Canada” or the “Company”), the profitable Canadian subsidiary of the broader Toys R Us company.
As quick background, on September 18, 2018, Toys R US-Delaware (“Toys Delaware”, or the “Parent” company of Toys Canada) filed for debtor relief under Chapter 11 in the US. The following day on September 19, Toys Canada filed for and was granted a stay of proceedings under the Companies’ Creditors Arrangement Act (“CCAA”), with Grant Thornton acting as CCAA Monitor (“Grant Thornton” or the “Monitor”).