It seems like not all hope is lost with regard to Toys "R" Us as the company may eventually restart operations in the United States after its controlling lenders decided to cancel the scheduled bankruptcy auction.
Last year, news broke out that the struggling retailer may be closing its doors to its loyal customers as it gears up to file for bankruptcy. Soon after, the move became official, and although the stores remained open during 2017's holiday shopping season, which is usually their busiest time of the year, the inevitable happened with over 735 stores all over the country shutting down one by one to the dismay of the brand's patrons. This also left 33,000 people without jobs. But in a shocking turn of events, it appears as if there's still a chance that Toys "R" Us may once again restart operations.
In the court documents acquired by WSJ, it's revealed that lenders have decided to cancel the upcoming bidding of properties. "Notwithstanding the receipt of Qualified Bids for certain of the Intellectual Property Assets, the Debtors have determined, in consultation with the Consultation Parties, to cancel the Intellectual Property Auction," the legal papers revealed. It turns out that the selling debtors "have determined that the Qualified Bids were not reasonably likely to yield a superior alternative to the Plan, including with respect to: (i) the probable economic recovery to creditors of the Selling Debtors’ estates; and (ii) the benefits to other direct and indirect stakeholders of maintaining the Toys “R” Us and Babies “R” Us brands under a newly-established, independent U.S. business, including, without limitation, expected expansion of employment opportunities for workers and merchandising opportunities for toy and other vendors."
Back in June, it was reported that former CEO Jerry Storch was looking a way to breathe new life into Toys "R" Us. During the executive's time in the company, the business earned $1 billion in earnings (before interest, taxes, depreciation, and amortization). Sadly, Toys "R" Us was not able to maintain their financial performance after his departure in 2013. While the legal documents didn't divulge whether or not Storch has anything to do with this surprising development, he would be a great candidate to join the board in mapping out the retailer's comeback considering his history with the brand.
Toys "R" Us was as one of the three largest customers for toy producing companies like Mattel and Hasbro alongside Wal-Mart Stores Inc and Target Corp. Its shut down resulted in an $11 billion loss in the toy industry. While there's slim to none chance that this new ploy will kick-in just in time for this year's holiday shopping season, the fact that there might still be a chance that the storied toy retailer may once again open its doors is already a welcome development for its loyal customers.