Mastermind Toys Plans to Open a Store in Fredericton

Mastermind Toys Plans to Open a Store in Fredericton

The company filed Chapter 11 documents late Monday in U.S. Bankruptcy Court in Richmond, Virginia and says its Canadian subsidiary plans to seek protection in parallel proceedings under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice.

"Vendors have cut them off based upon the rumours of the filing which has not been refuted", said Jay Indyke, a bankruptcy attorney with the Cooley law firm.

Ten days later, almost all the company's vendors refused to ship products without cash in advance, forcing Toys "R" Us to scramble to raise $1 billion for its suppliers, according to court filings. "The timing of all of this could not have been worse".

The move comes at a critical time leading into the holiday season that is crucial to retailers' bottom lines.

The retailer said that it has already received a commitment from some lenders, including a JPMorgan-led syndicate, for over $3 billion in debtor-in-possession financing.

The company intends to use the process to restructure itself, with a view of making the business not only viable but successful in the long term. He said the company's board realized it should file now, raise significant cash and reverse years of underinvestment. It hasn't worked. Neither have its big bets on licensed toys from movies like "Star Wars" and "Lego", as the Wall Street Journal noted.

On Tuesday, toy chain Toys R Us filed for bankruptcy in the USA and Canada, while it confirms its Australian stores will continue to operate.

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"It's the only showroom available".

Although toy sales overall have held up fairly well, they are shifting toward discounters and online companies. "There is no toy business without Toys "R" Us". Chief Executive David Brandon told analysts last June that the company's Babies "R" Us baby-products business was hurt by problems with an online registry tool and the lack of a subscription feature that would enable parents to receive regular shipments of diapers and other baby goods. The Toys R Us bankruptcy is a supplier nightmare, especially for those who have a smaller number of buyers, and it's a warning to those who work with traditional retailers.

"The last thing I'm anxious about right now is the vendor support", he said. The company has struggled with debt since private-equity firms Bain Capital, KKR & Co. and Vornado Realty Trust took it private in a $6.6 billion leveraged buyout in 2005.

The move would ensure the Canadian subsidiary of the global toy retailer - which applied for creditor protection in the US on Monday and in Canada a day later - has an uninterrupted supply of merchandise as it heads into the busy holiday shopping season.

With $400 million in debt owed by the company, Toys "R" Us has since brought on advisers to help plan for long-term growth.

In fact, the retailer's owners roughly a year ago started speaking to lenders in an effort to split the troubled United States arm from its more profitable global business, a lender said.

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