Facing crushing debt and competition from online retailers, Toys “R” Us filed for Chapter 11 bankruptcy Monday.
The company has more than $5 billion in long-term debt, $400 million of which is coming due in 2018, the New York Times reported. Vornado Realty Trust, along with Kohlberg Kravis Roberts and Bain Capital, borrowed heavily to purchase the company in 2005 for $6 billion.
To help Toys “R” Us continue to pay suppliers and employees, JPMorgan Chase and a group of other lenders are providing the company with $3 billion in financing.
“Today marks the dawn of a new era at Toys “R” Us, where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” Dave Brandon, Toys “R” Us chairman and chief executive, said in a statement.
As of December 2016, there were 13 Toys “R” Us locations across the city, according to a report by the Center for an Urban Future. The company indicated that its 1,600 Toys “R” Us and Babies “R” Us stores would continue to operate.
Other retailers, including Payless and Gymboree, also filed for bankruptcy this year. Retailers in the city and across the country have struggled to compete, due to the popularity of online shopping and increasing rents. [NYT] — Kathryn Brenzel