Retail giant Toys "R" Us, as you might know, is an American toy retailer.

Tuesday afternoon saw the revelation of admittedly shocking news that it has filed for bankruptcy protection (under Chapter 11 of the U.S. government code) in the U.S., reportedly as pressure from suppliers intensifies.

The Wall Street Journal reported that tightening of trade terms, including holding back on shipments unless Toys "R" Us is able to make cash payments on delivery as an example of such pressures.

Other factors include shrinking sales and heightened competition, especially from the online space — recurrent woes of the retail industry worldwide.

Asia not affected, though

The corporation has around 1,600 stores and 64,000 employees around the world. However, more than 200 licensed stores and joint venture partnerships in Asia will not be affected, as they are separate legal entities. 

In a statement shared with Mothership, Toys "R" Us (Asia) Ltd confirmed that the toy company's regional stores will not be part of part of the company's financial restructuring, being financially independent from all other Toys "R" Us operating companies around the world. This includes the 11 outlets in Singapore.

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Andre Javes, President of Toys "R" Us (Asia) Ltd, said:

"Toys "R" Us Asia is open for business and continuing 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."

Bankruptcy protection vs bankruptcy

Corporations filing for bankruptcy protection can file a reorganisation plan and repay their debts over time, allowing the company to continue to operate while repaying creditors. This means that even the Toys "R" Us stores affected by this action will continue to be open for the time being.

This is different from filing for bankruptcy (Chapter 7), which liquidates much of the debtor's property with the proceeds going towards the repayment of debts.

Toy "R" Us currently is reportedly more than US$5 billion in debt, with about US$400 million due next year.

Top image from Toy 'R' Us Singapore Facebook page.

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