Toys R Us Asks for Extra $80M in DIP Financing
Toy retailer Toys R’ Us Monday asked a Virginia bankruptcy court for the go-ahead to secure an additional $80 million in debtor-in-place financing it says it will need to keep its remaining overseas operations afloat.
The bankrupt chain asked the court permission for a subsidiary, TRU Taj LLC, to enter into a new DIP agreement, saying the insolvency proceedings started against its United Kingdom branch last month, the insolvency of its Spanish branches and the potential insolvency of other international subsidiaries had put TRU Taj at risk of default under the previous DIP arrangement.
“Since then, the TRU Taj debtors, and certain members of the ad hoc group of Taj noteholders, along with their advisors, have engaged in extensive, good faith negotiations regarding the waivers and amendments necessary to ensure the continued viability of the debtors’ international operations in central Europe and Asia,” it said.
The New Jersey-based children's toy chain and owner of Babies 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 of the company and take it private.
Following the bankruptcy the company secured a $3.1 billion DIP loan facility.
The retailer had hoped to dig itself out of a jam just before the holiday season, but last month it announced that it had decided to shutter operations in the U.S. and U.K. and liquidate all its domestic locations.
The company was reportedly preparing to liquidate its businesses in Australia, France, Poland, Portugal and Spain and seek buyers for its stores in Canada, central Europe and Japan.
In its Monday motion the company said the U.K. and Spanish insolvency proceedings, along with potential insolvency proceedings for other overseas subsidiaries, had triggered actual or potential defaults of the original DIP agreement.
As a result, the company began negotiating a new DIP arrangement last month in order to keep its central European and Asian stores operating, it said.
Counsel for Toys R Us did not immediately respond to requests for comment late Tuesday.
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, Michael A. Condyles, Peter J. Barrett and Jeremy S. Williams of Kutak Rock LLP, Mark K. Thomas and Peter J. Young of Proskauer Rose LLP and H. Slayton Dabney of Dabney PLLC.
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.
REPRINTED WITH PERMISSION FROM THE APRIL 10, 2018 EDITION OF LAW360 © 2018 PORTFOLIO MEDIA INC. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED. WWW.LAW360.COM
