Toys ‘R’ Us faces industry outcry
TOYS ‘R’ Us is defending its liquidation plan in US Bankruptcy Court against an onslaught of objections from creditors, particularly suppliers demanding payment for thousands of toys.
More than 50 suppliers, including Barbie-maker Mattel and Lego, have objected in some form to the proceedings by the storied toy retailer to shutter up to 735 US stores and 30,000 jobs.
Some suppliers are demanding the company return any unpaid inventory rather than sell it, court papers showed.
Even as Toys ‘R’ Us liquidates in the United States, it is trying to maintain business-as-usual in Canada, Europe and Asia, where it hopes to find a buyer.
The company will ask US bankruptcy judge Keith Phillips in Richmond, Virginia to approve a March 26 deadline for bids followed by an auction on March 29. It is also seeking approval for a series of US liquidation procedures including a halt to more than $450m in supplier payments as part of a plan that experts told Reuters could be a death blow to some smaller toy makers.
Toys ‘R’ Us was the last remaining specialty toy retailer in the US and hundreds of companies relied on it as a showcase for innovative toys as well as classics. Vendors were required to ship goods to Toys ‘R’ Us on unsecured trade credit.
In a court filing, Lego said any “wind-down must be implemented in a manner that is fair and equitable to all” of the company’s creditors.
The US Trustee, a bankruptcy watchdog, also objected, saying it is concerned about some of the procedures and relief proposed as part of the liquidation. (Reuters)