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Toys ‘R’ Us May File For Bankruptcy This Week

According to CNBC, the major toy company, Toys ‘R’ Us, may file for bankruptcy as early as this week.

The filing could come as soon as Monday, according to Bloomberg's Jodi Xu Klein and Matt Townsend. But, sources also noted the plans are not final, and that the possible timeline are subject to change.

Toys ‘R’ Us owes $5 billion in debt as part of a leveraged buyout in 2005. According to Business Insider, this is one of the major options for the toy retailer to pay down its debt.

The rise of online shopping, through retailers such as Amazon and Ebay, has made it difficult for the company to compete in the current market climate. The upcoming Holiday season, usually a good time for toy stores, has been challenging to Toys ‘R’ Us thanks to tighter terms from their toy suppliers.

According to CNBC, part of the retailer’s current financial problems “stem from vendors demanding tighter repayment terms, over fears that Toys ‘R’ Us may file for bankruptcy”.

If Toys ‘R’ Us does go through with filing for bankruptcy, the bankruptcy has the chance to be the biggest yet for the 2017 fiscal year; with more than 1,600 stores on the chopping block worldwide.

The Wall Street Journal reports that the company is also considering filing for Chapter 11 protection in the US Bankruptcy Court. That means the company would propose a plan of reorganization to keep its business alive for some time, and to pay creditors over a specific period of time.

The three owners have either declined to comment or did not immediately have a comment.

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