Toys R Us Files Chapter 11 Bankruptcy, Outlines Strategy

SYRACUSE, NY — Amid the company's announced filing of Chapter 11 bankruptcy protection in federal court Monday, Toys R Us Inc.'s stores remain open. The New Jersey-based retailer's approximately 1,600 Toys R Us and Babies R Us stores around the world, "the vast majority of which are profitable," are open for business, the company said.

There is a Toys R Us store in Clay and a Babies R Us store in Syracuse. (For more information on this and other neighborhood stories, subscribe to Patch to receive daily newsletters and breaking news alerts.)

Customers should not be alarmed as the company's newly launched websites are up and running, as are its rewards, registry and birthday list services, it said.

The company will look to restructure $5 billion of long-term debt in order to provide "greater financial flexibility to invest in our business and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide," Chairman and Chief Executive Officer Dave Brandon said in a news release.

The once-dominant retailer has struggled to compete with online retail giant Amazon and stores like Walmart, The New York Times reported.

Toys R Us had a $400 million debt payment due next year and was "burning through cash," the Times reported, and hired law firm Kirkland & Ellis to devise a strategy moving forward.

The bankruptcy filing includes some of the company's United States and Canadian subsidiaries. The company's Canadian subsidiaries also filed for bankruptcy protection.

Toys R Us's 255 licensed stores and joint-venture partnership in Asia, which are separate entities, are not part of the Chapter 11 filing.

"We are confident that this financial restructuring is the best path forward to ensure that Toys R Us can invest in our business, continue to improve our customers’ experience and strengthen our competitive position," the company said in a statement.

Toys R Us has received a commitment of more than $3 billion of debt financing from lenders, including JP Morgan Chase and some of its existing lenders, the company announced. This money is expected to "immediately improve" the financial health of Toys R Us, the company announced.

Toys R Us plans to invest $277 million from next year to 2021 to convert current locations into side-by-side storefronts dedicated to toys and its Babies R Us brand, USA Today reported.

Written by Daniel Hubbard (Patch Staff), with additional reporting by Michael Woyton/Patch Staff.

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