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Toys R US Lenders Look to Revive Brand

Lenders Cancel Auction of Retailer's Name, Seek to Start New Company
October 3, 2018
Toys R Us debt-holders canceled a bankruptcy auction so they can try to revive the toy company's brand. Pictured: Toys R Us store in Monroeville, Pennsylvania, now closed.



Don’t write off Toys R Us yet. In a new twist, the lenders to the toy retailer, which is in the middle of a liquidation, said in court papers they want to keep the Toys R Us and Babies R Us brands alive.

The controlling debt-holders canceled an auction of the Wayne, New Jersey-based company’s intellectual properties so they can reorganize and open new retail outlets under that moniker.

The debtors said that while they have received qualified bids for the retailer’s names, they want to create a new "Toys R Us and Babies R Us branding company that maintains existing global license agreements and can invest in and create new, domestic, retail operating businesses under the Toys R Us and Babies R Us names, as well as expand its international presence and further develop its private brands business," according to the filing Monday with the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond.

The qualified bids for the names "were not reasonably likely to yield a superior alternative" to the new plan, in terms of "the probable economic recovery to creditors" and "the benefits to other direct and indirect stakeholders of maintaining the Toys R Us and Babies R Us brands under a newly established, independent U.S. business, including, without limitation, expected expansion of employment opportunities for workers and merchandising opportunities for toy and other vendors," the filing said.

The filing is the latest chapter for Toys R Us after the retailer closed its stores and began selling its real estate and leases.

Last fall the company, struggling under debt from a leveraged buyout several years ago, filed for Chapter 11 bankruptcy protection. But in March, in the wake of a weak holiday season, Toys R Us changed course and said it planned to liquidate all its assets and cease operation, laying off more than 30,000 employees.

Late Tuesday a group of investors led by Toys R Us’s secured lenders issued a statement saying they are going to acquire the retailer’s intellectual property rights. The reorganized Geoffrey LLC portfolio will include the retailer’s brand names in the United States and globally, except for Canada.
“In addition to continuing to service these markets, the new owners are actively working with potential partners to develop ideas for new Toys R Us and Babies R Us stores in the United States and abroad that could bring back these iconic brands in a new and re-imagined way,” the statement said. “Geoffrey LLC will provide additional detail on this front as it becomes available.”

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