Thanks once again Amazon (AMZN) for destroying another childhood memory. Ok, it’s always the fault of a retailer if they cannot compete and adapt but this is depressing for us here at Quad7Capital.
It is no joke. Toys R Us could go bankrupt within weeks. Not months. Weeks. This is because it has been falling farther and farther into debt. It continues to struggles with billions of dollars of debt and mounting pressure from suppliers to pay in cash and on time.
Everyone knows the name. The global toy retailer, which has more than 1,600 outlets is probably going to file for Chapter 11 bankruptcy protection in the US before Christmas. This doesn’t mean it’s going out of business just yet. Chapter 11 can allow companies to stay operational as they reorganise and pay their creditors.
Toys R Us has around $5 billion of debt, $400 million of which the principal is due next year. It cannot afford it and it’s interest payments on all other debt. This has been an ongoing problem since buyout firms KKR and Bain Capital took it private for $6.6 billion in 2005.
Toys R Us suppliers are now tightening trade terms, including holding back on shipments unless they receive cash payments on delivery. While not specifically cited, the retailer is the latest victim in Amazon’a war path.