4 Dozen Toy Companies Including LEGO & Mattel Object To Toys R Us Liquidation Plans
Toys ‘R’ Us took part in a bankruptcy court hearing on Tuesday, to start the process of closing down its stores across the US. All the stores are due to close within 14 weeks, however if a store has sold all of its stock, it may close earlier.
The Liquidation sales are expected to start in stores on Thursday, however over 4 dozen toy companies including Mattel and LEGO have objected, along with utility companies, advertising and marketing companies, and cardboard and packaging suppliers. There was that many attorneys at the court hearing, that they had to use a second courtroom, with an audio link.
Toys R Us has promised to pay for any toy shipments received after March 5, but attorneys for the creditors committee have stated that manufacturers are owed $450 million for goods shipped to Toys R Us earlier.
Some trade vendors are demanding the company return any unpaid inventory rather than selling it and using going out of business sales to pay secured lenders and bankruptcy lawyers, at their cost, court papers showed. Since toy companies were required to ship goods to Toys ‘R’ Us on unsecured trade credit.
Lego said any “wind-down must be implemented in a manner that is fair and equitable to all” of the company’s creditors.
One adviser for Toys R Us, Joseph Malfitano of liquidation specialists Malfitano Partners, described the Toys R Us sell-off as “probably the largest retail liquidation in the country’s history.”