TORONTO — After closing 53 stores in the past two years and facing a succession of lawsuits from unpaid suppliers and landlords, Toys “R” Us Canada has turned to an Ontario court for reprieve as it tries to chart a new future.
The toy retailer announced Tuesday that it has filed for creditor protection while it embarks on a restructuring that could see its footprint further diminished or the whole business sold to new owners.
Creditor protection temporarily shields an insolvent company from having to pay those it owes money to while it figures out its next steps.
For now, the company will keep its 22 stores open but has warned more closures could come, putting the livelihoods of 654 employees at risk. It has paused its e-commerce business and will only accept gift cards at its remaining open stores for the next 14 days.
In court documents, Toys “R” Us Canada said these steps are necessary because the company has struggled to cope with inflation, rising labour costs, supply chain disruptions and a shift toward e-commerce.
It laid off staff, closed unprofitable stores, negotiated with suppliers and explored other revenue streams to try to cope with the headwinds in 2023 and 2024 but the moves weren’t enough to stabilize the business.
It reported a $170.4-million net loss over the last 10 months. A year earlier, its net loss was $54.7 million.
Toys “R” Us Canada says it now owes at least $160 million to unsecured creditors — a term used to describe firms that are owed money but can’t seize property or assets to recoup their costs.
About $120.9 million of that sum is owed to vendors and landlords also have “substantial” amounts outstanding from the retailer, Toys “R” Us Canada said in its Tuesday filing.
The Canadian Press previously revealed the company is being sued over alleged unpaid invoices by at least six suppliers, including Spin Master Ltd., the maker of Paw Patrol and Gabby’s Dollhouse toys.
It is also facing at least eight lawsuits collectively valued at about $35 million from landlords like RioCan Holdings and Calloway Real Estate Investment Trust, which have terminated Toys “R” Us Canada’s leases and accused the company of not paying rent.
The claims have not been tested in court but Toys “R” Us Canada said in its Tuesday court filing that it has “various ongoing litigation matters” related to claims for breach of contract or breach of lease.
In many of the cases, Toys “R” Us Canada has not filed a statement of defence. Where it has responded, the company has largely denied the allegations of its suppliers and landlords and taken issue with the amounts of money being demanded.
Liza Amlani, the co-founder of the Retail Strategy Group, said these kinds of issues “did not happen overnight” because retailers plan out their merchandise at least six months, if not a year, in advance.
“Vendors would have stopped shipping products, if they were not getting paid, which would impact supply,” she said in an email.
“Without product, the retailer could never make up for the loss in sales.”
The lawsuits came as Toys “R” Us Canada significantly reduced its footprint, closing stores it had operated for decades. Some of its properties have been put up for sale for as little as $1 and trailers, forklifts and other equipment from the headquarters it once had in Concord, Ont., were auctioned off just before Christmas.
Through its creditor protection filing, a chief restructuring officer was named and Alvarez & Marsal was appointed as a monitor. Monitors are typically appointed in insolvencies to act as independent and impartial observers and ensure distressed companies behave ethically.
Alvarez & Marsal said it understands Toys “R” Us Canada “intends to use the breathing room” that comes with creditor protection “to address its financial challenges and maximize the value of its business for the benefit of stakeholders.”
Liquidating stores, furniture and equipment and developing a sales process for the remaining locations are on the table, the monitor said in a court filing.
Toys “R” Us Canada is owned by a numbered company that does business as Putman Investments.
Ancaster, Ont-.based Putman Investments bought the business in 2021 from Fairfax Financial Holdings Ltd.
Fairfax paid $300 million to rescue the company and Babies “R” Us Canada in 2018, when it filed for creditor protection after the American arm of Toys “R” Us sought bankruptcy protection.
Putman also owns entertainment chains HMV, Sunrise Records and FYE as well as apparel retailers Ricki’s, Cleo and Northern Reflections and several book imprints under Putman Publishing.
In recent years, Putman opened HMV departments and play gyms in Toys “R” Us Canada stores and started selling Ricki’s, Cleo and Northern Reflections merchandise at the toy shop.
More recently, it paused online sales at Toys “R” Us Canada, Ricki’s, Cleo and Sunrise Records, telling customers e-commerce operations were being revamped and would return in mid-February.
Over the holidays, Putman closed all of its T. Kettle stores it once ran out of former DavidsTea locations and before that, shuttered a short-lived home goods venture called Rooms + Spaces that aimed to take the place of Bed Bath & Beyond Canada.
Putman’s sister company Everest Toys, started by the father of Putman Investments leader Doug Putman, was forced into receivership last year by TD Bank, which is owed $25 million.
The slew of troubles the Putmans have encountered reflect the fact that the toy industry has changed, said Amlani, the retail strategist.
“Consumers increasingly shop online for the best product mix at a great price or shop at one-stop mass merchants, which means toy specialty stores need a compelling product assortment, unique experiences and vendor trust to stay relevant,” she said.
“They need to give a reason for customers to shop their stores. Toys ‘R’ Us failed miserably.”
This report by The Canadian Press was first published Feb. 3, 2026.
Tara Deschamps, The Canadian Press
