Toys R Us CEO David Brandon confirmed to employees today that the company intends to sell or close all of its U. S. stores.
Reports surfaced last week that the company’s Chapter 11 bankruptcy would become Chapter 7 and the stores would be liquidated.
The news followed January’s announcement that 182 stores would be closing during this calendar year. Company officials determined, as sales continued to plummet, that the rest of its stores would need to close as well.
During a conference call, Brandon told employees the paperwork to begin the process would be filed tonight in advance of a court hearing scheduled for Thursday, according to CNBC.
A possibility still exists the company may remain open in some fashion if another buyer can be found, but such a deal would likely be on a much smaller scale, likely a sale of the company’s stronger performing Canadian operation along with approximately 200 stores in the U. S.
Company officials had hoped to restore the footing for Toys R Us and Babies R Us when they filed Chapter 11 bankruptcy in 2017 and had a $3.1 billion financing plan approved, but poor sales during the holiday season doomed that effort, according to a Bloomberg News report.
The company has been saddled with billions of dollars in debt since it changed hands under a leveraged buyout in 2005.
The poor holiday sales came after Toys R Us filed a request in U. S. Bankruptcy Court for the Eastern District of Virginia in which Brandon asked for approval to pay $32 million in bonuses to him and 15 other members of the management team. Axios reported the request came just after the company released a third-quarter report showing losses of $164 million.
The bonuses were to be based on sales, but Brandon asked that $16 million of the total be guaranteed whether the sales targets were met or not.
When word of the impending closures surfaced last week, Toys R Us tweeted a thank you to customers but did not address the reports directly.
The tweet acknowledged customers’ “amazing outpouring of love and support” and said it was appreciated and that Toys R Us stores were open and “ready to bring joy to children wherever we can and to help new and expecting parents navigate raising a family.”
The Chapter 11 bankruptcy petition indicated Toys R Us was more than $5 billion in debt, much of that coming from a combination of the leveraged buyout and the increased competition from online retailers, primarily Amazon.