Toys R Us got the approval of a Virginia bankruptcy court Tuesday for an abbreviated voting period for the Chapter 11 plan of its property holding companies in the United States, saying the impending closure of its stores makes reaching an approval hearing by the end of the month important.
Bankruptcy Court Judge Keith L. Phillips approved the company’s request to shorten the notice period for voting on the Toys R Us Property Company II LLC and Giraffe Junior Holdings LLC Chapter 11 plan from the standard 28 days to 19 days in order to hold a confirmation hearing July 30. The toy chain argued that the accelerated timeline is needed because its U.S. retail operations will shut down at the end of the month.
“If the plan is not confirmed and consummated on the current confirmation timeline, the Propco II plan debtors may not be able to realize the full value of their assets, thereby reducing recoveries for all stakeholders,” it said in its motion asking for approval of the plan disclosures.
New Jersey-based Toys R Us filed for Chapter 11 protection in September, with more than $5 billion in funded debt, stemming in large part from money its owners borrowed in 2005 to fund a $6.6 billion leveraged buyout to take the company private. In March, it announced it would close all of its 880 U.S. stores and file for liquidation.
The property companies plan, which would involve the sale of “substantially all” of the companies' assets, sets the vote solicitation deadline for Friday. The voting and plan objection deadline will be July 25, with a confirmation hearing set for July 30.
In its plan approval motion, Toys R Us said the accelerated schedule was needed to avoid as much as possible the carrying costs of holding onto the company’s real estate past the closure of its last stores at the end of July.
“Until a sale is consummated, these expenses will needlessly burden the Propco II plan debtors’ estates,” it said.
It argued that a shortened notice period will not be a problem because the plan involves a “straightforward” distribution of the sales proceeds to certain categories of secured and priority claims.
“In fact, the voting parties with the greatest interest in the Propco II plan debtors’ estates are already familiar with the general terms of the plan, and will not be prejudiced by the shortened confirmation timeline,” it said.
Counsel for Toys R Us did not immediately respond to requests for comment Thursday.
Toys R Us is represented by Edward O. Sassower, Joshua A. Sussberg, James H.M. Sprayregen, Anup Sathy, Chad J. Husnick and Emily E. Geier of Kirkland & Ellis LLP and Michael A. Condyles, Peter J. Barrett and Jeremy S. Williams of Kutak Rock LLP.
The case is In re: Toys R Us Inc. et al., case number 3:17-bk-34665, in the U.S. Bankruptcy Court for the Eastern District of Virginia.
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