Toys “R” Us Inc. announced it has filed for chapter 11 bankruptcy protection.
The Wayne New Jersey-based toy retailer has been struggling from heavy debt burden. Private equity Kohlberg Kravis Roberts, Bain Capital Partners and real estate firm Vornado Realty Trust acquired Toys “R” US in a leveraged buyout deal valued at $6 billion in 2005. The bankruptcy protection will help the U.S. toy store chain relieve from the debt and invest in long-term growth.
The company is now facing about $4.9 billion in debt, $400 million of which has interest payments due in 2018 and $1.7 billion of which is due in 2019.
"Today marks the dawn of a new era at Toys"R"Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way," said Dave Brandon, the company's chairman and CEO, said in a release announcing the filing. "We are confident that these are the right steps to ensure that the iconic Toys"R"Us and Babies"R"Us brands live on for many generations," \
Toys “R” Us, which also runs Babies “R” Us, said its 1,600 stores will continue operate as usual during the bankruptcy proceedings.
Traditional retailers face more and more competition from e-commerce. Children’s clothing retailer Gymboree also filed for bankruptcies this year.