Bankrupt retailer Toys "R" Us is at risk of breaching a covenant of its debtor in possession loan following an unexpectedly slow holiday season, CNBC reports. Citing sources familiar with the matter, CNBC says the retailer still in compliance with its $3.1 billion DIP loan provided by lenders led by JPMorgan Chase, and may need to seek options including seeking financing elsewhere. However a failure to meet certain terms could force the company to immediately pay back its loans, placing it in threat of liquidation.
The company is reportedly in the process of cementing a business plan that could include the closure of 200 retail outlets, according to multiple media reports.
As ABL Advisor reported in September, Toys "R" Us received a commitment for over $3.0 billion in debtor-in-possession (DIP) financing from various lenders, including a JPMorgan-led bank syndicate and certain of the company’s existing lenders.
That month the company announced that it and certain of its U.S. subsidiaries and its Canadian subsidiary have voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, VA.
Read the CNBC article in its entirety here