Big-box chain Toys “R” Us, which filed for bankruptcy late last year, is planning on closing or selling all 800 of its U.S. stores in the coming months.
The company says it was burning through $50 million to $100 million in cash a month as it struggled to pay back billions in debt.
“The stark reality is that (Toys “R” Us is) projected to run out of cash in the U.S. in May 2018,” the company said in a court filing on Thursday.
Bankruptcy lawyers say the chain, which also includes Babies “R” Us stores, must move quickly. Here’s what’s likely to be in store.
Q: When will the discounts begin?
A: Very soon — likely in the next week or two, bankruptcy lawyers say. Toys “R” Us, which is awaiting court approval for its liquidation request, already has assembled a collection of liquidation businesses to take over its stores and sell off inventory as quickly as possible.
Discounts will likely begin on the low end — 25 percent off, say — and increase in coming weeks. But there’s a catch: All sales are typically final once liquidation discounts begin.
Not all stores may have going-out-of-business sales right away. the chain’s has said it plans to liquidate 590 stores, but has identified 200 of its best-performing stores that it is trying to sell off with its Canadian operations. Those stores may not be liquidated right away.
No official word has been released in regard to the store at 2425 Wiley Blvd. SW in Cedar Rapids.
Q: What happens to my gift cards?
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A: Toys “R” Us says it will honor existing gift cards, as well as its Rewards dollars and Endless Earnings, for another 30 days. After that, you basically risk forfeiting any remaining value.
Bankrupt retailers are not legally required to honor gift cards.
It was not immediately clear what would happen to customers’ layaway plans or baby registries.
Q: When will stores actually begin to close?
A: Toys “R” Us has said it will pay employees for another 60 days, which it is required to do by law. But bankruptcy lawyers say some stores could shut down even sooner than that, as the company winds down its operations.
Q: Will the ‘Toys R Us’ name cease to exist?
A: Probably not. Toys R Us is looking for a buyer for its Canadian arm — which is in better financial shape than the company’s U.S. operations - and still has stores in central Europe and Japan. (The company said this week it would close all of its U.K. stores, and it is preparing to take similar action in Australia, France, Poland, Portugal and Spain.)
The retailer is also hoping to find a buyer for its website, as well as some of its more successful U.S. locations.