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Judge Confirms Toys “R” Us Chapter 11 Plan, Branding Deal with Lenders

November 14, 2018, 08:28 AM
Filed Under: Retail

A bankruptcy judge in Virginia approved a proposal that could salvage the iconic toy retailer Toys “R” Us by giving control of the brand to a group of hedge funds that will earn money primarily through licensing ventures. 

As ABLA reported last month, following a failed turnaround effort the company's top lenders decided to cancel a bankruptcy auction and instead invest in a new global licensing venture of the two stores Toys ‘R’ Us and Babies ‘R’ Us.  

According to a report in The Wall Street Journal, the funds that controlled Toys “R” Us’s secured debt—Angelo, Gordon & Co., Franklin Mutual Advisers, Highland Capital Management, Oaktree Capital Management and Solus Alternative Asset Management—blame the failed effort on the rise in online sales that have hit traditional retailers. 

According to Bloomberg News: "Lenders will take over the Toys “R” Us name and other intellectual property, the only assets left of the U.S. business after the company liquidated hundreds of stores and sold its businesses in Canada and Europe. The Asia operation will be sold under a separate reorganization plan that comes before Phillips later this month."

The plan confirmed Tuesday includes a branding venture that includes pop-up stores inside Kroger supermarkets, among other things. 

Finding the proposal "reasonable, persuasive, credible, and accurate," Judge Keith Phillips of the U.S. Bankruptcy Court in Richmond, Va., said in his ruling the so-called Delaware–Geoffrey Plan was "made in good faith, and serves the public interest, and assure fair treatment of holders of Claims and Interests."



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