MEMBER ALERT: Toys“R”Us Bankruptcy Update
April 23, 2018 | The purpose of this Member Alert is to inform Toy Association manufacturer members of recent court filings related to the Toys“R”Us bankruptcy proceedings. The Toy Association will continue to monitor developments closely and share any relevant news as quickly as possible. Members can access key Toys“R”Us bankruptcy documents on Prime Clerk’s website.
Upcoming Hearings and Recent Court Filings
Upcoming Court Hearings [Docket No. 2801]:
- April 24 - a review of TRU's March 19 "Domestic Financing Motion" related to the DIP financing, wind down budget, and payment of post-petition administrative claims. It is expected that this hearing will also address the sale of the Canadian operations.
- April 27 - a continuation of the April 24 hearing
- May 10 - related to the sale or other disposition of real estate assets
- May 24 - related to the administrative claims procedure and deadlines
Canadian Operations Auction [Docket Nos. 2807 and 2790]:
On April 22, TRU cancelled the Canadian Equity Auction originally scheduled for April 23. According to the court filings, Fairfax Financial Holdings bid $300 million for Toys"R"Us Canada Ltd., was designated as the Stalking Horse Bidder on April 19, and subsequently selected as the successful bidder because no other qualified bids were received.
TRU will seek court approval for the sale on April 24. Objections to the sale must be filed before or during the hearing on April 24. Terms of the Stalking Horse Agreement can be found in Docket No. 2790. Under the terms of the agreement, the bidder made a deposit of $6.5 million. The bid amount can be increased or reduced for several reasons and entitles the bidder to a breakup fee of 3 percent plus reimbursement of up to $500,000 in expenses. In addition, the agreement calls for all obligations of TRU Canada (except those claims barred under the January 25, 2018 Claims Procedure Order) to remain unaffected, including those prior to the bankruptcy filing. The sale will also terminate the Canadian bankruptcy proceedings. The sale of Toys"R"Us Canada Ltd. is subject to court approval.
Administrative Claims Procedures and Filing Deadline [Docket No. 2741]:
On April 16, TRU filed a motion to establish the procedures and deadlines for the filing of administrative claims. The motion proposes that for administrative claims arising before June 30, 2018, the deadline or bar date for filing proofs of claim is July 15, 2018. For administrative claims arising after June 30, 2018, the motion proposes a bar date the earlier of: (a) the 15th day of the month following the month in which the claim arose (i.e. a claim arising in the month of July 2018 must be filed by August 15, 2018) and (b) 14 days following any hearing on a plan of liquidation, structured settlement, or other proposed resolution to the chapter 11 case. The motion does not address potential recoveries or the allocation of recoveries, and TRU states that any authority to make payments on account of allowed administrative claims will be sought by separate motion, plan of liquidation, structured dismissal, or other process approved by the court.
Further, the proposed procedures only apply to the Toys-Delaware entities and Toys"R"Us, Inc., and does not apply to any potential administrative claims against the Taj entities or Toys Canada entities. The motion is subject to court approval at a hearing to be held on May 24, 2018, with objections due by May 17, 2018, at 5 p.m. (Eastern).
Members with questions about this case are encouraged to visit the Toys“R”Us Bankruptcy Information page on The Toy Association website or contact Paul Vitale, executive vice president of finance and operations at The Toy Association.