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September 28, 2017 Lawrence 'D' Pew

Toys ‘R’ Us Bankruptcy: The Rise and Fall of an Empire

Toys ‘R’ Us, the nation’s largest toy retailer, has filed for Chapter 11 bankruptcy after suffering from slumping sales and incurring a significant amount of debt. According to a news report on CNN.com, the 69-year-old retail giant was once hailed as the go-to place for children’s toys and gifts. However, over the last several years Toys ‘R’ Us has lost its place to Wal-Mart and more recently, Amazon. What’s more, the company amassed $5 billion in debt in its fight to stay relevant by signing major, exclusive licensing deals with toymakers and buying other toy companies like KB Toys.

Struggling with Debt

Toys ‘R’ Us announced that it had managed to secure $3 billion in bankruptcy financing, which it plans to use to restructure the company, alleviate its debt burden and rejuvenate its ailing stores. The bankruptcy filing comes just before the holiday season, obviously the busiest time for them. It plans on keeping all of its 1,600 stores open worldwide. The Wall Street Journal did report, however, that the company would likely close some of its stores that aren’t doing too well as part of the bankruptcy restructuring.

Toys ‘R’ Us has joined a number of companies that have caved to the online threat and filed for bankruptcy protection this year including shoe retailer Payless, and children’s clothing store, Gymboree. Toy companies are also faced with the challenge of children moving to mobile and tablets to play games as opposed to old-school dolls and action figures.

Understanding Chapter 11

Chapter 11 Arizona business bankruptcy involves a reorganization plan and could be filed by individuals and businesses. If the business is in debt because of a failed market for the goods or if sales are so low that the business can’t meet its operating costs, then, reorganizing or restructuring may not resolve the underlying debt problems. However, Chapter 11 can be a useful tool for businesses in a number of different circumstances in Arizona.

In some circumstances, filing for Chapter 11 bankruptcy in Arizona will allow for fast-track resolution. For example, a small business with under $2 million in debt may be fast-tracked in the Chapter 11 process. Also, in Chapter 11, there is no time limit set for long the business bankruptcy may continue. This gives the business and the debtor sufficient time to rehabilitate the company.

Our Arizona bankruptcy lawyers have observed a steady increase in the number of individuals who have chosen to file for bankruptcy under Chapter 11 when they might also qualify for Chapter 13 individual debt reorganizations. It is important for married couples to know that both husbands and wives have the ability to file separately or jointly under Chapter 11 just as they do under other chapters of the U.S. Bankruptcy Code.

Contacting an Experienced Lawyer

Whether you are an individual or a business attempting to reorganize and get your life back, the experienced Mesa bankruptcy lawyers at the Pew Law Center can help you understand the law better and help you grasp the unique benefits you may have as an individual petitioner under Chapter 11. Call us for a no-cost, no-obligation consultation.

Call (480) 745-1770 or fill out our contact form to get help from compassionate professionals. Stop worry and get help today.