In a statement released late Monday night, the Toys "R" U.S. explained that they're filing for bankruptcy protection to "restructure its outstanding debt," in hopes that it will lead to more sustained long-term growth for the retail company.
According to a company spokesperson, all Toys "R" Us and Babies "R" Us stores and e-commerce sites are open for business as usual.
Toys R Us wants to use its bankruptcy filing as a way to transform its stores into "interactive spaces". The company announcement also said separate operations outside the US and Canada are not part of the filings.
Dave Brandon, chairman and CEO of Toys "R" Us, wrote a statement on the company's website saying that the bankruptcy filing signifies the beginning of a new chapter for the company in effectively handling its financial problems.
Private equity firms Bain Capital and KKR & Co LP and real estate investor Vornado Realty Trust now own the toy seller, but the retailer will have new owners once it emerges, Brandon said.More news: Google in hot water: Three ex-employees file lawsuit for pay gap
On the first day of the bankruptcy proceedings, the company sought to win over large vendors by getting approval to pay them some of the tens of millions they're owed as creditors. But long before Amazon battered Toys 'R Us with a much deeper selection, Walmart was beating up the toy retailer with aggressive pricing on the most popular items during holiday seasons.
Will Toys "R" Us and Babies "R" Us continue to run typical sales and promotions?
The chapter 11 filing is amongst the largest ever specialty retailer and throws doubt over the prospective of it's about 1600 stores and 64000 employees.
But like many brick-and-mortar retailers, Toys R Us was overwhelmed by consumers' rapid shift to buying goods on the internet at sites such as Amazon.com and the severe price competition from those sites. For store locations and convenient online shopping, visit www.toysrus.ca.
By 2022, the company plans to spend around $1 billion to transform its big box stores by adding event space, increasing staff and wages for in-store product demonstrations and combining its flagship stores with Babies "R" Us stores.More news: 'Twin Peaks' actor Harry Dean Stanton has died, aged 91
The 69-year-old toy store has filed for bankruptcy protection as it tries to reorganize.
That insurance, in the form of put options, usually lasts about 18 months and recently carried a fee of 3 percent a month - a stiff premium that reflected how risky Toys "R" Us had become, those sources said.
Toys R Us's operations in Australia, about 255 licensed stores and a joint venture partnership in Asia are also not included in the bankruptcy move.
Toys R Us said "the vast majority" of stores of both brands are profitable.
"I don't know that they planned to file this early", said Richard Gottlieb, chief executive of Global Toy Experts.More news: Fire engulfs Malaysia's religious school, 22 kids die
One way for the company to adapt would be to have "interactive and experiential" stores, with more opportunities for children and parents to test and play with products. Its shares dropped 6.6 percent. He later began selling toys as well and adopted the Toys R Us name in 1957, with the backward R in the logo to give the impression a child had written it.