Toys R Us Reportedly Near Bankruptcy

PITTSBURGH, PA - Burdened with hundreds of millions of debt, Toys R Us has hired a law firm to mull options that could include bankruptcy. The toy store chain the latest in a growing number of brick and mortar retailers who are experiencing difficulties as consumer spending habits increasingly shift to online options.

Toys R Us has hired the law firm of Kirkland and Ellis, which specializes in debt restructuring, to deal with $400 million in debt that needs to be repaid by 2018. The company said it might seek to borrow more money to remain solvent.

“Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing," Toys R Us spokeswoman Amy von Walter told CNBC.

But the network reported that Toys R Us might have difficulty finding a willing lender. The growing number of retail bankruptcies has made it increasingly difficult for heavily leveraged retailers to tap the refinancing market.

Neal Saunders, managing director of GlobalData, a retail consulting firm, told USA Today that a Toys R Us bankruptcy definitely is not out of the question.

"If they cannot reach sensible agreements with lenders or find ways of restructuring their debt, it is a very distinct possibility,'' he said. "It would also be helpful in giving Toys R Us some flexibility to exit leases and stores that they no longer want."

Toys R Us has eight locations in southwestern Pennsylvania:

• West Mifflin: 275 Clairton Boulevard.

• Monroeville: 3735 William Penn Highway

• Ross: 2003 Cheryl Drive

• Bethel Park: 4000 Oxford Drive

• Robinson: 2001 Park Manor Boulevard

• Cranberry: 1000 Cranberry Square

• Washington: 201 Oak Spring Road

• Greensburg: 136 Danohe Road

Photo: Mike Mozart via Creative Commons.