Following the collapse of Toys “R” Us — once one of the largest toy retailers in the country — merchandise suppliers and an insurance company have come forward with allegations of dishonest behaviour and questionable transactions.
Two suppliers allege that Doug Putman, the Canadian businessman who purchased the toy giant from Fairfax Financial Holdings in 2021, led them to believe they would be paid for merchandise, but failed to follow through on that promise before the company filed for creditor protection in February.
The toy retailer, which is now seeking to restructure under the Companies’ Creditors Arrangement Act (CCAA), owes $91 million to two secured creditors — both numbered companies owned by Putman — and more than $159 million to some 500 unsecured creditors, including toy suppliers, other vendors and retail space landlords, according to court documents.
When approached by the Star, Toys “R” Us said the allegations from one of the suppliers were false and did not respond to the other allegations.
Allied World Specialty Insurance Company, a merchandise supplier insurer that has paid $50 million in claims, raised the concern in court last week that Toys “R” Us engaged in “non-arm’s length transactions that warrant immediate scrutiny” — before filing for creditor protection — such as selling five owned properties to a related party that ultimately resulted in a loss for the retailer.
The related party is not disclosed in the documents, but is generally defined as an entity — such as a subsidiary or stakeholder — with significant control or influence over another company’s business decisions.
According to an independent auditor’s report by Doane Grant Thornton, the toy company sold five properties with a book value of $42 million to a related party for $38 million, resulting in just $8 million in proceeds, after deducting mortgage and contractual obligations.
Allied asked the court-appointed monitor to investigate any undervalued asset transactions or preferential payments to creditors, some of which are owned and controlled by Putman. The court granted the request, authorizing the monitor to review all transactions from the past 12 months and any real property sales within the past 24 months involving related parties to Toys “R” Us.
Toys “R” Us declined to comment on this matter.
Boris Zilberberg, CFO of Kidcentral Supply, a Toronto-based wholesaler and distributor of baby and maternity products, which supplied Toys “R” Us for 20 years, said his company is owed more than $477,000 by the retailer.
He took Toys “R” Us to court in November 2025 and made the difficult decision to lay off four of his employees, including sales representatives with six-figure salaries.
Zilberberg told the Star that he worried his company would only recover money “when there’s a snowball in hell.”
Speaking of the layoffs, Zilberberg said, “this was totally out of character for us as a company, but necessary. I have to look out for the other 50 people.”
He added that, “Toys “R” Us continues to sell Kidcentral products that they have never paid for.”
According to the Kidcentral lawsuit, Toys “R” Us executives, including Putman, offered assurances of payment, but did not follow through, allowing the arrears to spiral.
Toys “R” Us said in a statement to the Star that it disagrees with Zilberberg’s characterization of its business and Putman, and that his comments are false.
Sam Perez, the president and CEO of Kushies Baby, who has sued Toys “R” Us for $81,000 in unpaid invoices, said he was also personally promised by Putman that he would be paid in full when the two met at an event in 2025.
Perez claimed that he was later told by a Toys “R” Us buyer that as long as he kept shipping inventory, the payments would come. Perez said he did as instructed for a while, but the small amount he received barely made a dent in the outstanding balance.
“In my industry, a lot of stores had to shut down, but they did not do what Toys “R” Us did for its customers. (The company) continued to ask for products while they weren’t paying bills,” Perez said.
“I would not have even shipped $1 to them,” he said.
Toys “R” Us did not respond to Perez’s allegations.
John Sawyer, the CEO of Raincoast Distribution Group, a book distributor owed $1.9 million by Toys “R” Us, said he was pleased with Putman’s attempt to host a children’s book section, which was a success on its own.
“It has been a shame to see ambition overreach fundamentals and threaten dissolution,” he said. “As you note, this will lead to a large loss for a company of our size, though due to our strong financial position, it is manageable.”
Sawyer said he would like to see Putman or a new buyer succeed with a smaller set of Toys “R” Us stores following the CCAA process, and if they did, he would “certainly consider” supplying them.
Putman, who also owns Sunrise Records and HMV, has a reputation for scooping up ailing businesses and turning them around, but some of his businesses have failed.
Home goods retailer Rooms + Spaces and tea brand T. Kettle have both ceased operations, and Everest Toys was placed into receivership while owing $25 million to TD Bank.
Linda Galessiere, an insolvency lawyer representing some of the landlords owed money by Toys “R” Us, said that there are three likely outcomes following the CCAA process.
Toys “R” Us has said in court documents that it plans to initiate a sale and investment solicitation process to find a last-minute buyer and investor for its business.
Because Putman owns two of the secured creditors, Galessiere said he could potentially make a “credit bid” through a different entity to purchase some Toys “R” Us businesses using the debt his companies already owe as currency.
She added that Toys “R” Us could also end some underperforming leases and reach an arrangement that requires a majority of its creditors to approve settling the debt for a lesser amount before restarting the business. If no investor or buyer emerges, the retailer could liquidate all assets, close its stores and continue with bankruptcy proceedings.
Putman is best situated to put in a bid to purchase the business because “he owns the debt, he understands the business, and his company was supplying critical services to Toys “R” Us,” Galessiere said.
Timothy Dunn, an insolvency lawyer not involved in the case, agreed, saying he wouldn’t be surprised if one of Putman’s other companies purchased parts of Toys “R” Us and continued with a smaller footprint.
Court documents reveal that Putman is marketing 11 of the 13 properties containing Toys “R” Us stores. The toy retailer shrank from 81 to 22 stores in four years under Putman’s leadership.
“The real unknown at this point is what the value of this business is, given the broken economic model and the fact that the related Putman entities are looking to sell the real estate under the majority of the current stores,” said Dunn.
“If the value of the business is less than the amount of the secured creditor debt, there would be nothing available for unsecured creditors in this process.”
