According to sources, Toys ‘R’ Us is reportedly preparing to file for bankruptcy before the holiday season.
Comments that were published by the Wall Street Journal and Reuters suggest that Toys ‘R’ Us could be forced to file for bankruptcy in a matter of weeks. This is after the toymaker has met tighter terms from suppliers ahead of the Christmas season.
As consumers increasingly shop online with retailers like that of Amazon, the toymaker had a difficult time to compete in the current market.
If the filing takes place, the bankruptcy will be the largest to take place in 2017. The toymaker has more than 1,600 stores worldwide and around $5 billion in debt.
The Wall Street Journal revealed that Toys ‘R’ Us was considering filing for Chapter 11 protection in the US Bankruptcy Court.
Sources said that the company would need to secure a loan of several hundred million dollars as part of any possible bankruptcy filing to be able to reassure the chain’s vendors that it could pay them for the products needed to stock its shelves for the holiday season.
Part of the current financial problems of the retailers started from demanding tighter terms of repayment over worries that Toys ‘R’ Us may file for bankruptcy, sources said.
Previously, the retailer has said that it is working with an investment bank to assess options for around $400 million in debt that comes due in 2018.
This year, Toys ‘R’ Us opened a store in Times Square in New York City to capture more holiday shoppers.