Last fall, Toys "R" Us filed for bankruptcy, becoming another casualty in online retailers' prolonged assault on brick-and-mortar stores.
A JPMorgan-led bank syndicate and a group of existing lenders initially agreed to commit $3.1 billion in debtor-in-possession (DIP) financing to support operations during the restructuring. As a result, it is becoming increasingly likely that the US branch of the company will be liquidated, leading to the closure of all USA stores.
The New Jersey-based toy chain entered bankruptcy in September, planning to emerge with a leaner business model and more manageable debt, The Los Angeles Times reported.
The company announced earlier this month they planned on closing stores in the United Kingdom, but it's not clear how many. The report cites anonymous sources close to the company.More news: Tillerson Pledges $533 Million in US Humanitarian Aid to Africa
LONDON, ENGLAND - FEBRUARY 19: Closing down signs sit on the window of Toys R Us in New Kent Road on February 19, 2018 in London, England.
A liquidation could also spell disaster for smaller toy companies.
But it had an additional burden that stacked the deck against it - close to $5 billion in debt resulting from a leveraged buyout in 2005. It initially pledged not to close stores, and its earnings had shown improvement by some measures. A month later, the New Jersey-based toy retailer said it would likely close another 200 - or almost half - of all its stores. The company has about another 800 stores worldwide. In the early 1990s, sales were increasing at a 10 percent annual clip.
Even so, both Mattel and Hasbro took hits in the stock market on Friday.