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Oct 13, 2017

Toys "R" Us files for commercial bankruptcy protection

As e-commerce competitors change the marketplace, many retailers are struggling to maintain their traditional model. As a result, some retailers in Ontario and throughout Canada are considering commercial bankruptcy as an option if necessary. Toys "R" Us recently made headlines when it filed for bankruptcy protection in the United States and Canada.

The toy retailer took this step due to $5 billion in long-term debt. Despite the move, the company says normal business operations will continue through the busy holiday season.  In Canada, the retailer launched a voluntary reorganization proceeding under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto. These proceedings will help restructure the debt of its Canadian entities and provide a plan for the 82 Toys "R" Us stores across the country. 

The CEO said that commercial bankruptcy protection and court-supervised voluntary restructuring will help the retailer's North American entities move forward. Through the process, it will work with investors and creditors to restructure debt. The move does not affect Toys "R" Us entities outside of Canada and the United States, many of which the company says are financially sound.

Struggling businesses have many options available to handle their debt problems, but it can be challenging to choose the right move. This is especially true for global businesses that must navigate the laws of different countries to develop a solution. In Ontario and the rest of Canada, speaking with a commercial bankruptcy lawyer can help clarify what options exist, including the need for bankruptcy protection.

Source: CBC News, "Toys 'R' Us files for bankruptcy protection in Canada, U.S.", Sept. 19, 2017