Toys-R-Us filed a voluntary petition for Chapter 11 bankruptcy protection with the US Bankruptcy Court for the Eastern District of Virginia on September 18th, 2017. The company, like many struggling retailers, has had a tough time turning a profit while competing with massive online retailers such as Amazon and Walmart.com. As with most companies filing for Chapter 11 bankruptcy, Toys-R-Us filed bankruptcy to seek relief from debt, while staying in business and continuing to operate the company. While the company originally stated it would strive to keep all 1,600 nationwide stores open for business, Toys-R-Us announced it will be closing its location in Dayton, Ohio. Bankruptcy has also forced the company to close more than 180 additional stores representing a 20% reduction in brick-and-mortar Toys-R-Us locations.
Chapter 11 Bankruptcy
Toy-R-Us decided to declare bankruptcy to attempt to gain relief from nearly $5 billion dollars in debt. When the company filed for Chapter 11 bankruptcy, a spokesperson declared there would be no store closings. The move to wait until after the Christmas shopping season, the company’s’ busiest time of the year, was obviously strategic and focused on maximizing revenue needed to continue operating during the bankruptcy proceedings. Toys-R-Us has won court approval to extend its Chapter 11 bankruptcy reorganization plan submission date until July 15, 2018, in order to give the company more time to liquidate assets and renegotiate terms with its creditors.
Other Ohio Store Closings
Other Toys-R-Us store locations will also be closing as a result of the bankruptcy. Ohio stores that will be shutting down by way of “going out of business sales” are located in Cincinnati, Mentor, Dublin, and Western Hills. The sales are expected to be in February and be completed in April this year. The company stated in a press release last week that if it is able to secure more favorable lease terms with landlords, they may be able to prevent some of the more profitable stores on the list from closing.