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Troubled toy store chain Toys R Us filed for Chapter 11 bankruptcy protection late last night, saying it needs the flexibility to revamp more than $5 billion in debt, including a $400 million debt payment due next year.

The New York Times writes that while Toys R Us has had its problems competing with big box stores such as Walmart and e-commerce players such as Amazon, the heavy debt load “has weighed on the company for years. The private equity firms Kohlberg Kravis Roberts and Bain Capital, as well as the real estate firm Vornado Realty Trust, purchased the company in a leveraged buyout for about $6 billion in 2005.”

Company management said that bankruptcy would allow it to focus on the long term and “fuel its aspirations to bring play to kids everywhere and be a best friend to parents.”

The Times writes that “JPMorgan Chase and a group of other lenders have agreed to provide the company $3 billion in financing,” allowing Toys R Us to continue to pay employees and suppliers. However, there have been reports that at least some suppliers have started requiring shipments to be paid for on delivery.
KC's View:
This isn’t much of a surprise, but not because rumors about an impending bankruptcy protection have been floating around for weeks. The fact is that more retailers have filed for bankruptcy protection already this year than did all of last year, and there probably will be more.

I know that it bothers some folks when I decry the Toys R Us experience (some of those emails are in “Your Views,” below). But I have to say that I always found a visit to its stores to be a chore and was more about assaulting my spirit than lifting it up. Toys R Us was never my “best friend,” and I think they probably need a lot more than bankruptcy protection to convince me that there is a path forward to long-term viability.