Suppliers Are Unhappy With Toys R Us’ Bankruptcy Proceedings

While Toys R Us said that it would try to honor its payments to suppliers and lenders, over 50 suppliers, such as Lego and Mattel, are not happy with the company’s current bankruptcy proceedings — at least in some form. The embattled toy retailer, for example, is seeking approval to stop over $450 million in payments to suppliers, Reuters reported.

Toys R Us also bought goods on unsecured trade credit, so some of its trade vendors want the retailer to send back unpaid inventory. The retailer could conceivably sell the inventory and use the money to pay bankruptcy lawyers as well as secured lenders.

Still, the retailer said it’s doing everything it can to pay back its suppliers. “We’re making every effort to make sure (trade vendors) will be paid in full,” Lazard’s David Kurtz, who is advising Toys R Us, said in bankruptcy court, according to Reuters.

The news comes as the retailer will either sell or shutter all of its brick-and-mortar stores in the U.S. after failing to restructure its debt or find a buyer, Reuters reported. Toys R Us has over 700 remaining locations in the U.S., including those under the Babies R Us banner. If completed, the company’s liquidation would be among the largest in retail history since Sports Authority closed nearly 500 stores, The Wall Street Journal reported.

Since a leveraged buyout, Toys R Us has been burdened with over $5 billion in debt. Competition from eCommerce retailers such as Amazon and discount stores such as Walmart hasn’t helped the company either.

Beyond the U.S., Toys R Us Chief Executive David Brandon said the company may liquidate its operations in France, Spain, Poland and Australia. In addition, the company hopes to find a buyer for its Canadian business, which it plans to package with 200 stores in the U.S.

“We’re putting a for sale sign on everything,” Brandon told employees, according to the WSJ. “Frankly, all anyone has to do is offer one dollar more.”