RIP Geoffrey: Toys ‘R’ Us to close all of its UK stores as the company goes into administration
A little over six months since it filed for bankruptcy, Toys ‘R’ Us has officially gone into administration.
Negotiations to turn the business around failed and the company had until this week to settle their bills, which it was reportedly unable to do. The retailer will now start plans to close down its stores, 106 of which are in the UK, effectively putting more than 3,000 jobs at risk.
Toys ‘R’ Us Inc also has 1,600 branches across the US, Canada and Japan and a total of 64,000 employees in all regions. In a so-called Chapter 11 filing last year, the 60-year-old retailer asked for bankruptcy protection, with analysts citing the rise of online shopping and declining high streets being partly to blame. Toys ‘R’ Us was also said to be saddled with debt following its acquisition in 2005.
According to Reuters, the Chapter 11 filing, made in the US Bankruptcy Court for the Eastern District of Virginia in Richmond was “among the largest ever by a speciality retailer”.
To ensure suppliers still received orders for the holiday season, JP Morgan and other banks and lenders agreed $3 billion “debtor-in-possession financing” to help Toys ‘R’ Us restructure over the coming months.
Also known as a DIP, a debtor-in-possession is an individual or company that has filed for bankruptcy protection but keeps control of the business. Under the DIP order, Toys ‘R’ Us were given the chance to continue to run the business while retaining “the powers and obligation of a trustee to operate in the best interest of any creditors”.
In the US, a Chapter 11 is a form of bankruptcy in which a company will reorganise its debts and assets. Its named after the US bankruptcy code 11. Due to the fact it lets companies reorganise their finances, it’s also referred to as giving the firm a “fresh start” as long as they adhere to the conditions of the bankruptcy order. A Chapter 11 is meant to be seen as a last resort, after other measures have been taken to reduce the debt and pay creditors.
The Toys ‘R’ Us annoucement came on the same day one of UK’s biggest electronics chain Maplin similarly announced it was going into administration after talks with buyers failed to secure a sale. Maplin has more than 200 stores across the country, with 2,300 employees and will continue to trade during the administration process.
Brexit and a withdrawal of credit insurance was to blame.
As we mourn two of the UK’s most iconic retailers, take a trip back in time with this Toys ‘R’ Us ad:
And if the above has left you feeling nostalgic, this incredible post explains the history of Geoffrey the Giraffe and what happened to his face.