Toys ‘R’ Us files for bankruptcy in US, but it’s business as usual in Hong Kong
City’s 13 stores to continue as they had been going in joint venture
America’s largest toy store chain has filed for bankruptcy protection, but its operations in Hong Kong are unaffected by the proceedings.
Toys ‘R’ Us filed for relief under Chapter 11 of the US Bankruptcy Code on Monday and intended to seek protection in Canada under the Companies’ Creditors Arrangement Act.
The new financial arrangement will not affect the retail giant’s operations outside the US and Canada, including its units in Europe and Australia and about 255 licensed stores and joint venture partnerships in Asia.
Toys ‘R’ Us has 13 stores in Hong Kong, according to its official website. Its business in the city is carried out as a joint venture with Fung Retailing, a privately held entity and member of the Fung Group.
The company said it had received a commitment of more than US$3 billion in debtor-in-possession financing from various lenders.
A court-supervised process is being implemented at its US and Canadian units, allowing it to restructure its finances while continuing normal business operations.
Subject to court approval, the new financing was expected to immediately improve the company’s financial health, Toys ‘R’ Us said.
In a separate statement, Toys ‘R’ Us (Asia) confirmed it is not part of the financial restructuring.
“Toys ‘R’ Us [Asia] is open for business and will continue to serve our customers as we always do. We are a financially robust and self-funding retail operation, which continues to significantly grow and invest in this region,” company president Andre Javes said.
Under the joint venture, Toys ‘R’ Us owns around 85 per cent of Toys ‘R’ Us (Asia), with Fung Retailing owning 15 per cent.
Toys ‘R’ Us (Asia) currently runs 226 stores in mainland China, Taiwan and Southeast Asia.
It also licenses an additional 35 stores in the Philippines and Macau. In March this year, the 161 stores under Toys ‘R’ Us Japan were also integrated into the pan-Asia toy store chain.
Additional reporting by agencies