Skip to main content

Report: Toys ‘R’ Us begins unwinding operations; suppliers oppose liquidation plan

Amid the nation’s largest toy store’s plan to wind down operations, suppliers are objecting to its liquidation plan.

Toys “R” Us is heading to U.S. Bankruptcy Court on Tuesday, March 20, to defend its liquidation plan against an onslaught of objections from creditors, particularly those from suppliers demanding payment for thousands of toys, according to Reuters.

Less than a week ago, the company filed documents with the court seeking approval to begin conducting a wind-down of its U.S. business and liquidation of inventory in all 735 U.S. stores, including its locations in Puerto Rico.

According to Reuters, the toy retailer is heading back to court Tuesday to approve a March 26 deadline for bids, followed by an auction on March 29. It is also seeking approval for a series of U.S. liquidation procedures, including a halt to more than $450 million in supplier payments.

However, more than 50 suppliers, including Barbie maker Mattel and Lego, are to the proceedings. Overall, some suppliers are demanding the company return any unpaid inventory rather, than selling it and using going out of business sales to pay secured lenders and bankruptcy lawyers, at their cost, court papers showed, the report said.

Despite the opposition, Toys “R” Us continues to slowly wind down operations. According to Business Insider, liquidation sales in some locations could start as soon as Thursday, and associates across stores and warehouses in several states — including Wisconsin, New Jersey, Missouri, Hawaii, and Georgia — were informed their locations will shut down by May 14, according to Worker Adjustment and Retraining Notification Act (WARN), a law that requires companies with 100 or more employees to provide advance notice of mass layoffs.

According to the report, Employees also received letters on March 15, that stated the company is moving forward with liquidation plans across “all of its U.S. operations and [will] close all of its retail locations in the U.S. Based on the best available information, the company believes that your employment will be terminated on May 14, 2018."

They will not receive severance, the report said.

Meanwhile, in-store events, such as the company’s annual Easter egg hunt, as well as birthday parties have already been canceled. In addition, helium tanks are being picked up this week as well, stripping the company its ability to blow up birthday balloons, according to CNBC.

It also has stopped building bikes and power wheels, and will no longer deliver or assemble swing sets, the report said.

Toys “R” Us filed for bankruptcy protection in September 2017.
This ad will auto-close in 10 seconds