Debtors Decide to Bring Toys ‘R’ Us Back From the Brink

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Toys “R” Us was thought to be dead in the water, but that seems to be turning around after its lenders decided to not go through with the bankruptcy auction of its brand, intellectual property and assets. Instead, the lenders plan on reviving the brand.

The debtors are planning to reopen Toys “R” Us and Babies “R” Us as a branding company that will maintain existing global license agreements that can invest and develop new retail businesses.

According to the Wall Street Journal:

The pivot comes after the company consulted with its controlling parties—a group of lenders that includes Solus Alternative Asset Management and other hedge funds—that were behind the retailer’s decision to close its doors.

In September last year, Toys “R” Us filed for Chapter 11 bankruptcy protection in an effort to restructure some $5 billion in debt, much of which stemmed from a $6.6 billion leveraged buyout by private equity firms in 2005.

However, this changed in March when the company decided that it would sell its operations abroad and shut down in the United States.

The result of the Toys “R” Us bankruptcy left an $11 billion hole in the toy industry, and hundreds of toy vendors without a major bricks-and-mortar platform to sell their goods. Other companies like Walmart and Amazon have scrambled to fill the space in the meantime.