Toys R Us will live on in Canada, and its stores in Germany, Switzerland and Austria will join an Irish toy chain, but the fate of the iconic retail brand in this country remains uncertain.
In a Bankruptcy Court hearing Tuesday, it was announced that Toys R Us is selling its Canadian stores to a Canadian investment firm and its Central European division to the Irish toy retailer Smyths. In the United States, Toys R Us is preparing to auction off its name, websites and baby registry, along with more of its store properties. Toy manufacturer Isaac Larian, whose initial bid for 274 U.S. stores was rejected, has said he will try again with a better offer.
On Tuesday, U.S. Bankruptcy Judge Keith Phillips, who is overseeing the liquidation of the Toys R Us empire, ruled in favor of the deal to sell the Canadian division for $300 million Canadian dollars, which equals about $234 million U.S. dollars at Tuesday's exchange rate.
The buyer, Toronto-based Canadian investment firm Fairfax Financial Holdings Ltd., plans to keep the 82 Canadian stores open, according to an interview Fairfax President Paul Rivett gave to The Globe and Mail, a Canadian newspaper. Rivett told The Globe and Mail that he would like to see the stores brought "into the modern retail era" and become destinations where kids can play with toys while their parents grab a cup of coffee.
Fairfax and Rivett declined to comment further when contacted by The Record on Tuesday.
The sale must also be approved by a Canadian court.
The Smyths toy chain has an agreement to buy the stores in Germany, Switzerland, and Austria for 79 million euros, which is equivalent to $96.7 million U.S. dollars at current exchange rates. Toys R Us announced that agreement Monday.
Smyths, according to Toys R Us, plans to rebrand the Central European stores as Smyths stores.
Toys R Us also is negotiating with multiple prospective buyers for its Asian operations.
Toys R Us filed for Chapter 11 bankruptcy protection in September. It originally hoped to be able to restructure and emerge from bankruptcy, but after dismal store performance over the Christmas season, lenders and investors became reluctant to put more money into the company. It announced on March 15 that it was liquidating all of its U.S. stores.
Toys R Us attorney Joshua Sussberg said Toys R Us plans to file a motion this week establishing procedures for the auction of Toys R Us intellectual properties in the United States, such as the trade names Toys R Us and Babies R Us, the websites, "as well as the world's largest baby registry."
Attorneys for Toys R Us and for toy vendors owed money for toy shipments made after Toys R Us filed for bankruptcy told the Bankruptcy Court that they have reached a consensus that will allow Toys R Us to proceed with its plan for funding its operations while it is liquidating.
Part of that agreement calls for a "fee examiner" to be named to evaluate the fees paid to attorneys and other professionals involved in the bankruptcy, to determine if any of that money could be used instead to pay vendors or other creditors.
