Morgan Golliver, News Editor
Liquidation sales have begun for Toys R Us after the company announced earlier in March it would be closing its 182 U.S. stores in the next month.
Emotional connections aside, concern for the toy giant’s future started in September 2017 after the company filed under Chapter 11 of the U.S. Bankruptcy Code.
“Chapter 11 of the federal bankruptcy law is designed to allow debtors (an entity that owes money) to shed some of its debt, reorganize its business and pay other debts over time,” said Stephanie Nesbitt, associate professor of risk management and insurance at UC. “With any chapter 11 action, a debtor may choose to close some of its operations. There are also times when companies that are attempting to reorganize under chapter 11 of the federal bankruptcy law determine there is no viable way for the business to continue operations. When this happens, the company converts their chapter 11 case to a chapter 7 case. Chapter 7 of the federal bankruptcy law governs the liquidation and closure of the business.”
Nesbitt explained it may seem like Toys R Us has converted from a chapter 11 to a chapter 7 case but stated that might not the case.
“Toys R Us is pursuing what is known as a ‘going concern’ reorganization,” Nesbitt said. “In other words, Toys R Us is still in a chapter 11 reorganization case, but they have elected to close some of their operations (the U.S.-based Toys R Us stores) and sell all of the operations’ inventory while they are working to find a buyer or buyers for their international divisions. In fact, there has been some speculation in the last several days that there may be a buyer for their Canadian division that also may be interested in purchasing some of the U.S. Toys R Us locations. However, this is highly speculative at this point, and it will not stop the inventory liquidation and closure of all of the U.S. locations at this time.”
Toys R Us has been “putting joy into kids’ hearts and a smile on parents’ faces” since its founding in 1957. But since its announcement, many smiles have been turned upside down, including the smiles of UC students.
Jocelyn Clement, a junior, was disappointed to hear the announcement of Toys R Us’s closing.
“I know if my nieces want something specific for their birthdays or Christmas, Toys R Us always has it in stock,” she said. “It was always my go to place for gifts.”
Clement will now shop at Walmart to find what she needs for birthdays and other occasions.
Junior Katie Cope was saddened to hear her favorite toy store from her childhood would be closing.
“I heard about Toys R Us closing a few weeks ago and didn’t know whether to believe it because of the various stories,” she said. “When I discovered that it was true, my initial reaction was sad because, like many other kids, this was my favorite store to go to. They had every toy you could imagine, and from a kid’s perspective it was like heaven. I always looked forward to going here and picking out toys because they had everything a kid could dream of.”
Cope recently attended the Communication in Action course in NYC over spring break where she had free time to visit the iconic Toys R Us store in Times Square.
“There was a lot to offer for the kids,” she said. “With a total of three floors, shelves were stocked with toys and games. As I walked through the aisles, it was sad knowing that this store won’t be available to future kids.”
As Toys R Us prepares to close its doors, Cope said she plans to go to Walmart or Target for toy shopping.