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Chapter 11 might not spell the end for iconic toy retailer

On Behalf of | Oct 5, 2018 | business & commercial bankruptcy |

Tales of the storied but troubled toy retailer Toys “R” Us’ demise might prove to be premature and ultimately unfounded. The once-venerable business that filed for Chapter 11 bankruptcy liquidation last year and was widely expected to be completely shut down might still “have a shot” at resurrection in some form.

So says a Bloomberg article from earlier this week that chronicles the company’s decline, takeover by lenders, Chapter 11 filing and recent plan to liquidate intellectual property assets in an auction.

The auction has just been halted, with the creditors signaling a new business approach. Reportedly, they intend to revive the still-famous brand. Bloomberg notes their goal “to reorganize the assets into a new company that … can invest in new retail operating businesses.”

Although that newly revised tack was unexpected, it is hardly singular, with a Chapter 11 bankruptcy not spelling the end of the proverbial road for all commercial filers. We explicitly noted that in a R3M Law blog post from 2017 spotlighting the distinct challenges confronting Toys “R” Us.

We stressed in last year’s September 27 entry that, while commercial bankruptcy can sometimes be an optimal vehicle for terminating business operations, it can also “lay the groundwork for a long-running and successful business.”

It is too soon to tell how things will play out for the evolved business entity contemplated by the iconic toy entity’s creditor group. Resurrecting a dormant brand “is not easy,” says one industry commentator.

Still, Toys “R” Us would seem to be a viable candidate to buck the trend. The company’s longstanding stature as a colossus in the toy industry could just bring it back from the brink.

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