Toys R Us Files for Bankruptcy

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.

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