LOS ANGELES (CBSLA) – Within six weeks of announcing it was closing more than 380 stores nationwide, Toys ‘R’ Us is making preparations for a complete liquidation of all its U.S. stores after so far failing to find a buyer or reach a debt restructuring deal with lenders following its bankruptcy, it was reported Friday.
In January, the company announced it would be closing more than 180 of its nearly 880 U.S. stores, including about two-dozen in California, affecting 4,500 workers. Then in February, it announced it would be closing another 200 more.
While the situation is still fluid, a shutdown of the U.S. division has become increasingly likely in recent days, people familiar with the matter told the Los Angeles Times. Hopes are fading that a buyer will emerge to keep some of the business operating, or that lenders will agree on terms of a debt restructuring, sources told The Times.
The toy chain’s U.S. division entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt. A new $3.1 billion loan was obtained to keep the stores open during the turnaround effort, but results worsened more than expected during the holidays, casting doubt on the chain’s viability, according to The Times.
Toys ‘R’ Us has over 1,600 stores worldwide, which are also at risk.
The situation has deteriorated for many of the retailer’s overseas divisions, which weren’t part of the bankruptcy, according to the Times. Toys R Us’s U.K. unit put itself in the hands of a court administrator after discussions about selling the business fell apart. Its European arm is seeking takeover bids.
Talks are being held to offload the growing Asian business, the company’s most profitable arm, The Times reported. It’s not yet clear what will happen to the Canadian unit, which filed at the same time as the U.S. division.
The U.S. closures began in early February, with the majority of closures happening in mid-April.