Even with the Christmas season coming, it must have been a ‘Come-to-Jesus’ meeting for Toys ‘R’ Us and its lawyers.
Kirkland and Ellis, a top ranked restructuring firm, was hired to look at options for the struggling retailer. Refinancing was on the Christmas list, but the attorneys had some bad news.
“Second-Rate Website”
Chronicling that history, the Washington Post put the blame on Toys ‘R’ Us: “Lousy in-store customer service, a second-rate website, and prices that are often higher than at many of its big-box competitors.”
The company’s $5 billion debt didn’t help, either. Chief executive Dave Brandon said in Chapter 11 filings that the company has a plan to get out from under its leveraged buyout in 2005.
“Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion of long-term debt on our balance sheet,” he said.
Retail-Mageddon
The toy company’s demise did not occur in a Christmas vacuum. It does its biggest business during the holiday season, which brought in $11.5 billion last year.
But the company had to go bankrupt just to make it to the New Year, when $400 million in loans become due. And then there is that retail-mageddon thing.
More than 300 retailers have filed for bankruptcy this year, including Gymboree, RadioShack, and Payless. Macy’s, Sears, and Bebe have closed hundreds of stores.
Related Resources:
- Toys ‘R’ Us Seeks Bankruptcy to Survive Retail Upheaval (Reuters)
- What Should General Counsel Do If the Company Is Going Down? (FindLaw’s In House)
- In House Counsel: 3 Tips to Get a Jump on the Holidays (FindLaw’s In House)
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