Toys R Us goes bust – but UK stores are safe

TOYS ‘R’ Us became the latest victim of the slump on America’s Main Street as the company filed for bankruptcy protection.

In what is believed to be the largest filing of its kind by a speciality retailer, the toy store applied to courts for permission to restructure debts of £3.7bn.

It would give bosses breathing space to overhaul the ailing business while also guaranteeing suppliers they will be paid ahead of the Christmas trading period.

The company has received commitments for more than £2.2bn in financing from lenders, who include a JP Morgan-led banking syndicate. Bosses insisted yesterday the move would have no immediate impact on staff and some 1,600 stores worldwide – including 101 in the UK – and the filing only applied to its American businesses.

However, it is understood the restructuring of the group could lead to significant changes further down the line following a review of the business.

Dave Brandon, chief executive, said: ‘Together with our investors, our objective is to work with our debt holders and other creditors to restructure the longterm debt on our balance sheet.’ Once the pre-eminent toy-seller in the US, the group has faced tough competition from online retailers such as Amazon as well as discounters such as Walmart and Target. But more than a dozen large retailers have filed for bankruptcy in the US this year, including discount shoe chain Payless Holdings LLC and designer clothing chain BCBG Max Azria Global Holdings LLC.

Others such as Macy’s and Sears have also closed hundreds of locations.

With assets of £5.1bn based on its most recent annual report, Toys ‘R’ Us’ filing is the second-largest retail bankruptcy, trailing Kmart, which had £10.8bn in assets, which filed in 2002.