Toys 'R' Us Refusal to Grow Up Ends in Bankruptcy Liquidation

The once-popular toy retailer is preparing liquidation plans that will result in the closure of hundreds of U.S. stores.

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Many Americans may recall a time when visiting a Toys 'R' Us store felt like walking into a sort of wonderland. There parents and players alike could find everything from the most elaborate toys on the market to the hottest video games and consoles, or track down elusive collectors' items like Pokemon cards or Beanie Babies. It was a good feeling, but one that would ultimately prove fleeting: as the retailer's popularity waned, Toys 'R' Us was left struggling to make ends meet, and in 2015 the company filed bankruptcy citing $4.9 billion in debt. Now it appears that Toys 'R' Us is finally ready to meet its own end, as reports indicate that the company is currently drafting liquidation plans.

According to a report from CNBC, Toys 'R' Us recently began drafting a court motion for a liquidation plan that will likely result in the closure of all 800 U.S. Toys 'R' Us stores. A later report states that the company is working on a proposal that could leave around 200 stores open; however, one source close to the Wall Street Journal states that the company told its employees that it will likely close all U.S. stores.

Either way, it looks like anywhere from 600 to all 800 Toys 'R' Us stores in the U.S. will be closing. Not only will this affect the company's employees directly, it will also have an impact on the toy industry as a whole, as Toys 'R' Us accounted for somewhere between 15 and 20 percent of all U.S. toy sales made last year. With Toys 'R" Us storefronts closed, toy manufacturers will either have to fight for more space at retailers like Walmart or lean more heavily on web-based stores such as Amazon.

As for what ultimately caused the retailer's demise, Toys 'R' Us seems to have had difficulty in keeping up with competitors and making proper payments to its vendors. Reports indicate that the company was operating the business as usual up until last week, when it missed a payment to a few of its vendors. After that, it seems the company simply stopped responding to phone calls. In fact, most of the information regarding the liquidation that's been reported has been offered through anonymous sources, as the business plans themselves are still confidential. As such, we're still waiting to hear official word from the company regarding details of the liquidation plan.

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Kevin Tucker is a core component of Shacknews' powerful guide development team. For questions, concerns, tips, or to share constructive criticism, he can be reached on Twitter @dukeofgnar or through e-mail at kevin.tucker@shacknews.com.

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