Toys R Us closed the doors of over 70 U.S. stores back in June after filing for bankruptcy last September. Now, a year after that bankruptcy filing, the lenders in charge of the brand have cancelled the bankruptcy auction. Lenders in charge of the Toys R Us property are planning a revival of the brand.
Bloomberg reports that the lenders in charge of Toys R Us cancelled their plan to auction off intellectual property. The lenders are seeking to reorganize the 70-year-old company’s assets into a new organization. This new company, the lenders said, will operate new retail businesses.
Furthermore, the funds in control of Toys R Us said this is the “best option” for the brand, and stakeholders of the company. Qualified bids were placed on various assets including Babies R Us and Geoffrey the Giraffe before the auction was cancelled on Monday. The controlling lenders determined these bids wouldn’t “yield a superior alternative to the plan,” and cancelled the auction.
Toys R Us filed for bankruptcy last year, as it had nearly $8 billion in debt while only holding $6.6 billion in assets. The company’s debt had long been looming, and weakening sales weren’t helping. After that bankruptcy filing the company had an abysmal holiday season. Toys R Us announced that it would close all of its 800 stores across the United States. The last of those stores closed at the end of June.
The closure left over 30,000 people out of a job, with no severance in sight. According to The Washington Post, those workers may receive some amount of their severance pay. Rise Up Retail has said the workers are owed over $70 million in severance pay. The firms that currently own Toys R Us have set aside $20 million for severance pay.
Executives were awarded $8 million in bonuses the week before last year’s bankruptcy. The firms controlling Toys R Us have faced criticism for how they handled closing stores, and laying off the workforce.