Toy retailer Toys R Us may be filing bankruptcy this week

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Toy retailer Toys R Us may be filing bankruptcy this week
Toy retailer Toys R Us may be filing bankruptcy this week

Among several options the chain is considering to pay down $5 billion in debt it owes as a result of a leveraged buyout in 2005.

Trio of owners – private equity firms Kohlberg Kravis Roberts and Bain Capital Partners and real estate investors Vornado Realty Trust, bought the company in a deal worth $6.6 billion.

A Chapter 11 bankruptcy would allow the company to restructure $400 million in debt that is due in 2018, and then renegotiate the rest.

Toy retailer Toys R Us may be filing bankruptcy this week

The chain had earlier hired law firm Kirkland & Ellis LLP, it was exploring options to take care of the debt, and is currently working with its creditors to turn back a Chapter 11 filing.

As per source, the filing is likely to come as soon as this week.

The debt crisis looms at a critical time for the toy seller.

Toy retailer Toys R Us may be filing bankruptcy this week

Due to rush of holiday shopping, Toy R Us made 40 percent of its sales in the 4th quarter. Vendors are highly anxious about the chain’s ability to pay down its debts, which could lead to a shortage of toys and further worsen the issue.

-PTC News