Toys R Us Spared From Extinction — For Now
This afternoon, as Geoffrey the Giraffe was being strapped to the electric chair, and the burly guy with the black hood over his face was doing his stretching exercises in preparation for pulling the lever, there was a sudden call from the governor. Toys R Us has been saved at the fifty-ninth minute of the eleventh hour!
The only question is what form it will take from this point, because it may not return the same way. The original plan was to sell off the Toys R Us name and assets in a bankruptcy auction to pay off the massive debt (five BILLION with a B!) the company had accumulated over the decades. But the hedge fund managers who control TRU talked about it and decided an auction would be less lucrative than trying to reintroduce Toys R Us in some fashion.
However, it wouldn’t be quite the same. The Toys R Us that closed near you won’t be opening back up — all 735 outlets were sold off and can’t be reclaimed (unless they want to buy back the ones that haven’t been converted into other businesses). Instead the plan, in their words, is to reinvent TRU as a “branding company that maintains existing global license agreements and can invest and develop new retail shops.”
The biggest problem with Toys R Us still remains — the people in charge. They dug this hole for themselves in the first place, and we’re skeptical they can dig their way out, when you consider all the years they had pre-bankruptcy to do so. We wouldn’t be shocked if this new effort falls on its face. And five billion is a large bill to ignore.