Iconic toy retailer Toys ‘R’ Us has filed for Chapter 11 bankruptcy protection, the company announced Monday, according to CNBC.
Here are three things to know about Toys ‘R’ Us and bankruptcy protection:
1. Toys ‘R’ Us is billions of dollars in debt. The company was $5 billion in debt as of April 29, according to a USA Today report. The company saw a net loss of $164 million in the first quarter and a consolidated net sales decline of $113 million, according to the report.
2. The toy store is looking for help in restructuring, according to reports. Reports say the company has most of its seasonal merchandise, but its suppliers are withholding items until the retailer can pay cash for them right away. The company hired the law firm Kirkland and Ellis to help pay down about $400 million in debt by the year’s end, according to USA Today.
3. Chapter 11 could allow the company to keep stores open while restructuring debt. Unlike the recent Chapter 7 filing of bridal clothier Alfred Angelo, Chapter 11 bankruptcy allows a business to restructure debt without liquidating assets.