Toys R Us' likely liquidation will have a ripple effect

Toys R Us' likely liquidation will have a ripple effect

Toys R Us' likely liquidation will have a ripple effect

Clint Gaudry, an executive with Toys "R" Us Canada, said the 82 Canadian stores will remain open, continue to honor gift cards and carry on the store's policies.

The company's assets were bought and sold numerous times before being acquired in 2009 by - you guessed it - Toys "R" Us. I want to thank our extraordinary team members who helped build Toys" R " Us into a global brand.

The faltering toy retailer is preparing to head to court with a plan to liquidate the company.

The plan "was to reduce our exposure in the baby business which has been our most troubled business under the most pressure both in terms of sales, market share and margin dollars", he said.

This saddled Toys R Us with an astronomical amount of debt - over $5 billion worth - that the company hadn't shaken even a decade later.

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Brandon said a buyer of the Canadian business could choose to purchase the 200 best-performing United States stores and keep them operational.

Employees at several midstate stores reached Thursday morning said they heard the announcement that the debt-riddled New Jersey-based toy retail giant, known for the giraffe mascot, is running out of cash and must liquidate its stores. In January the company said it would close 182 stores across the United States.

Kirkland & Ellis LLP is serving as principal legal counsel to Toys "R" Us. After that, the value on the gift cards will be useless.

The Canadian operations of Toys "R" Us are managed in Canada and operate autonomously from the USA operations, giving them a separate and healthy balance sheet, said Satov, but any buyer would still need to push for a discount.

If Toys R Us ends up finding a buyer for its most profitable stores, then the online business could be sold off as part of that deal, he said.

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"Gift cards aren't going to last forever - and neither is Toys R Us".

But its debt, much of which stemmed from 2005, when three private investment firms took the company private, limited its ability to invest and compete with fast-growing rivals.

"Toys R Us hasn't been able to tread water as the tides have shifted in the vast retail ocean", Mark Cohen, director of retail studies at Columbia University's Graduate School of Business, tells Denise Dahlhoff, research director at Wharton's Jay H. Baker Retailing Center, on the Knowledge@Wharton podcast.

Schumer said that once the Toys "R" Us liquidation is complete, gift cards could be "as worthless and unwanted as a lump of coal in a stocking".

More: Toys R Us: Does 'Everything must go!' always signal huge bargains?

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