Putman Investments, the owner of Toys “R” Us, is listing 11 store properties for sale and plans to close additional underperforming locations as the retailer undergoes creditor protection.
The toy chain has wound down dozens of locations in recent years and currently operates 22 stores across six provinces in Canada, 13 of which are located on properties owned by Putman Investments.
In a court filing Tuesday, Toys “R” Us said its parent company is selling 11 of its owned properties, and plans to apply to the court on Friday to issue 30-day disclaimer notices for several underperforming locations leased from third-party landlords.
“Depending on whether a sale occurs, (Toys “R” Us) continued operation at the subject location may be impacted,” Neil Taylor, the retailer’s chief restructuring officer, said in an affidavit.
The retailer did not respond to the Star’s question about which 11 properties are involved and the liquidation timeline before publication.
The insolvent toy giant, which has struggled with declining sales and owes $120 million to its vendors, filed for creditor protection on Feb. 3.
The company currently has more than $36 million in outstanding gift card liabilities and will only honour them until Feb. 17.
According to the court document, Toys “R” Us will self-liquidate the inventory, furniture, and fixtures at those closing stores and initiate a sales process to identify a buyer or investor to either rescue the business through a sale or through refinancing.
If approved by the court, the first lease to be disclaimed will be the one at Niagara Pen Centre in St. Catharines. The retailer will also close its Upper Canada Mall location in Newmarket by March 31, following a mutual agreement with the landlord to terminate the lease.
Since entering creditor protection, Toys “R” Us has cut 52 positions but still employs 510 unionized workers with no registered pension plans, including 439 at the store level and 71 in corporate and head office roles.
Those jobs are on the chopping block, as the company has informed employees that it will further reduce payroll and shutter stores in the coming months.
“Many of the Applicant’s stores are continuing as usual, however the Applicant is performing a review of its store network, and certain underperforming locations will likely be closed during these (Companies’ Creditors Arrangement Act) proceedings,” Taylor wrote.
According to Toys “R” Us’s creditor list, the company owes $91 million to two secured creditors — both numbered companies owned by Doug Putman, who acquired the toy retailer from Fairfax in 2021.
A court document filed on Feb. 2 reveals that Putman did not pay Fairfax the full purchase price for Toys “R” Us upfront. Instead, part of the purchase price was structured as deferred monthly payments over an extended period, secured by the retailer’s intellectual property.
The day before Toys “R” Us filed for creditor protection, a numbered company owned by Putman purchased the remaining payment obligations owed to Fairfax for an undisclosed amount and assumed its rights and interests in the intellectual property.
The debt made the company the largest secured creditor, with $76 million owed — ranking above all other creditors.
Toys “R” Us is obligated to pay back its secured creditors first and allocate any remaining funds from the sale of inventory or business assets to its more than 500 unsecured creditors, who are collectively owed $159 million.
In some cases, there is little to nothing left for those unsecured creditors.
A court document that top claims in this category include $6 million owed to Lego Canada, $8 million to Barbie maker Mattel Canada Inc., and $3.7 million to Spin Master, the Canadian firm behind Paw Patrol.
