Toys “R” Us Canada, after shutting down 53 stores in recent years and facing legal actions from unpaid suppliers and landlords, has sought refuge in an Ontario court to navigate its path forward. The toy retailer disclosed its move to file for creditor protection as part of a restructuring endeavor that may result in a downsized presence or a potential sale to new proprietors. Creditor protection serves as a temporary shield for financially troubled companies, allowing them to defer payments while strategizing their next moves.
According to court filings from Toys “R” Us Canada, the company cited challenges in managing inflation, escalating labor expenses, supply chain disruptions, and the growing dominance of e-commerce as reasons for their financial struggles. Despite implementing measures like staff layoffs, store closures, supplier negotiations, and exploring additional revenue channels in 2023 and 2024, the business failed to achieve stability.
The company acknowledged owing approximately $120 million to vendors and substantial sums to landlords. While its current 22 stores are operational, Toys “R” Us Canada cautioned about the potential downsizing of its store network. Alvarez & Marsal, an external monitor appointed to guide the company through the creditor protection process, mentioned options like liquidating stores, furniture, and equipment, as well as initiating a sales procedure for the remaining outlets.
Owned by Putman Investments, Toys “R” Us Canada was acquired from Fairfax Financial Holdings in 2021. Putman Investments, based in Ancaster, Ont., is also associated with brands like HMV, Sunrise Records, and others. The company had previously closed T. Kettle stores during the holiday season and discontinued a home goods venture called Rooms + Spaces. Additionally, its sister company Everest Toys, founded by Doug Putman’s father, faced receivership last year.