Toys R Us Canada has sought creditor protection under the Companies’ Creditors Arrangement Act. The company is evaluating strategic alternatives and undergoing restructuring initiatives, including reducing its retail footprint, according to a Feb. 3 announcement.
There are 22 Toys R Us locations in Canada, all of which have a Babies R Us presence. All locations will remain open during the CCAA process, but its e-commerce platform has been suspended as the company strategizes about its restructuring, per court documents filed at the start of February.
Toys R Us Canada owes $120 million to vendors and “substantial amounts” to its landlords.
The toy company sustained operational and financial pressures over the past several years that decreased liquidity, according to court documents. The business experienced a decline in sales in both 2023 and 2024, and many store locations became unprofitable.
The company underwent steps to reduce expenses, improve margins and address its retail footprint. It closed unprofitable locations, underwent layoffs and engaged in supplier negotiations, among other steps.
Toys R Us Canada filed for CCAA protection in 2017 as part of a larger restructuring of the Toys R Us group, including a Chapter 11 bankruptcy in the U.S. Toys R Us Canada didn’t close any stores during the 2017 bankruptcy and, as a consequence, wasn't able to exit the leases for underperforming stores. The company is currently pointing to that decision as part of the trajectory regarding why it is currently seeking creditor protection.
A CCAA filing is a way for a company to restructure its finances while avoiding bankruptcy, and gives creditors a way to receive payment.
