Despite Billions of Dollars in Debt, Toys 'R' Us Lenders Seek to Reboot the Brand

After filing for bankruptcy in June, Toys 'R' Us announced its doors may be reopening—still without promise to pay its former employees and the small promise of paying a mere 22 cents on the dollar it owed creditors after the company filed for bankruptcy. Lenders plan to sell the intellectual property of Toys 'R' Us instead of continuing with a bankruptcy auction, which lenders are hoping will lead to a reboot of the chain.

According to National Real Estate Investor, Toys 'R' Us lenders plan to open stores globally, and they are working with potential partners to fund the projects as they develop new ways to rebrand one of the most iconic children's stores.

But with creditors already receiving so little back from the company and with about 30,000 employees still without their promised severance packages, Toys 'R' Us' comeback may not prove to be fruitful. Before filing for bankruptcy, Toys 'R' Us was more than $5 billion in debt. It's unclear whether a rebrand can save the company once more, but credit managers should continue to remain cautious on whether to extend credit to the future Toys 'R' Us.

—Christie Citranglo, editorial associate