Toys R Us begins liquidation sales, could be done in June
Toys R Us is hoping to start liquidation sales at most of its U.S. stores Thursday and complete those sales by the end of June.
The timetable was disclosed Tuesday at a hearing in U.S. Bankruptcy Court in Richmond, Va. The toy superstore chain came seeking court approval for its liquidation sale plan.
Toys R Us had hoped to remain in business with about 700 stores still in operation but abruptly filed for bankruptcy liquidation last week. In February, it began going-out-of-business sales at 144 of its U.S. stores.
The company’s distribution centers, which supply the stores, will close before the stores do, said Bill Kosturos, vice chairman of U.S. restructuring for Alvarez & Marsal, one of the companies advising Toys R Us in the liquidation.
The whole operation is expected to take 14 weeks. Some stores may close earlier if inventory sells out faster.
Toys R Us, based in Wayne, N.J., cited competition from discount chains and online retailers as reasons it was unable to stay in business after restructuring.
The Toys R Us liquidation plan was called unfair to the toy manufacturers during the eight-hour court hearing. More than four dozen toy manufacturers, including big names such as Lego and Mattel, have filed objections to the plans.
U.S. Bankruptcy Court Judge Keith Phillips was not swayed by arguments by vendors that they would be better off if the Chapter 11 liquidation case was converted to a Chapter 7 liquidation, with the sale of assets placed in the hands of a court-appointed trustee.
‘Tough decision’
“It’s a tough decision, in the way that pulling life support from a brain-dead patient is a tough decision,” said James Wilton, attorney for the vendor Thorley Industries.
David Kurtz, vice chairman and head of global restructuring at investment bank Lazard, which was advising Toys R Us during its restructuring, said Toys R Us executives began to realize they might not meet their holiday projections as early as Black Friday, the kickoff of the Christmas toy shopping season.
One adviser for Toys R Us, Joseph Malfitano of liquidation specialists Malfitano Partners, described the Toys R Us sell-off as “probably the largest retail liquidation in the country’s history.”
Canadian deal
Toys R Us is still hoping that it will be able to keep up to 200 U.S. stores open as part of a package deal to sell its Canadian operations. Potential new owners of the Canadian business might be interested in taking over the operations of some of the most profitable Toys R Us stores in this country.