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Vendors Of Toys 'R' Us Loose Assurance Of Payment As The Retailer Shuts Down

Vendors Of Toys 'R' Us Loose Assurance Of Payment As The Retailer Shuts Down
Toy makers felt assured about them getting paid as Toys ‘R’ Us attempted to emerge from Chapter 11 and when it managed to get hold of a $3.1 billion bankruptcy loan in September.
But now as the toy retailer is moving towards liquidation, that assurance is fading away fast.
There were chances of bankruptcy for a number of small vendors in the U.S. because of the shutting down of Toys ‘R’ Us and Babies ‘R’ Us according to executives, specialists and lawyers.
For the business of the Wayne, New Jersey-based retailer in Asia, Europe and Canada, the company is still on the look out of a buyer even though the shutting down of the company in the U.S. has been fast. Till such time as buyers are found, the company wants to maintain customers and value by keeping the stores stocked.
“We have a $14-$15 million payment due that hasn’t been paid,” Isaac Larian, chief executive of Bratz dolls maker MGA Entertainment, told the media. “If I was a guessing man, I wouldn’t think I’d get all of it back.”
Supply of toys to Toys ‘R’ Us were stopped last week by MGA. Last year, the L.O.L. Surprise! toys were marked to be the top seller in the U.S. toy industry. 15 per cent of the company’s’ sale took place through Toys ‘R’ Us. Larian has also bene consultations with lawyers for buying out Toys ‘R’ Us’ Canadian operations along with other vendors.
“I have been working from 4 a.m. till midnight every day on this talking to other toy company executives, lawyers, bankers, other retailers,” Larian said. “I’m exhausted.”
Hourly calls were being received by vendor lawyers over the claims for hundreds of millions of dollars, said the lawyers at a hearing at U.S. Bankruptcy Court in Richmond, Virginia. The result of the liquidation process would determine whether they would receive payment.
The endnote for Toys ‘R’ Us had been written some time back according to some. In the first and second quarters of 2017, coverage of Toys ‘R’ Us was stopped by insurers, said Marc Wagman, who heads insurance broker Gallagher’s U.S. trade credit and political risk business.
“Unfortunately, for a lot of these toy companies, Toys ‘R’ Us represented a means of testing consumer taste, a big retail opportunity and, for some, accounted for 20-40 percent of revenue. How that’s going to be replaced remains to be seen,” Wagman said.
Brands such as Walt Disney Co which offered products along with partner labels related to such superhit films like “Frozen” and a few about the “Star Wars” series as well as small, innovative toy makers would be suffering because of closure of Toys ‘R’ Us as they depended on the company for their sale simply because Toys ‘R’ Us was amongst the last large toy retailers with some of its stores as large as 50,000 square feet and annual revenues of $11 billion.
“I have a short-term concern about the loss of business, the loss of one of my best partners over many, many decades,” said Joseph Shamie, president of Delta Children. The vendor is one of the biggest for children’s furniture and has about 470 employees.
“I have to create opportunity so I can continue to employ the people I employ,” he said.
“We’ll work really hard with folks like Walmart and Target to see if they can take up volume by year-end,” said Jay Foreman, chief executive of Basic Fun!, which sells Cake Pop Cuties and Poopeez as well as classics like Lite-Brite.

Christopher J. Mitchell

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