In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides insights into the bankruptcy case of Toys “R” Us’ real estate arm.
Article Link: https://commercialobserver.com/2018/03/toys-r-us-real-estate-arm-files-for-bankruptcy-affecting-859m-of-debt/
Summary
Toys “R” Us’ real estate subsidiary, Toys “R” Us Property Company I, filed for Chapter 11 bankruptcy, affecting $859 million in debt. This move followed the toy retailer’s announcement of liquidation plans, which included closing approximately 700 U.S. stores. The bankruptcy filing for the property arm, which occurred in the Eastern District of Virginia, impacts creditors whose collateral is the company’s owned real estate. Adam Stein-Sapir from Pioneer Funding Group, not directly involved in the case, commented on the situation, noting that these creditors will be part of the broader Toys bankruptcy case.
- The subsidiary’s bankruptcy filing impacts $859 million of debt, with the largest claims from Guggenheim Partners, J.P. Morgan Chase, and H/2 Capital Partners.
- The loans against the owned properties were set to mature in August 2019, with the outstanding principal amount noted as of September 2017.
- The broader Toys “R” Us bankruptcy includes other creditors whose collateral encompasses the company’s remaining assets.
Q&A
What happens to creditors in a bankruptcy case like Toys “R” Us’?
Creditors become part of the bankruptcy proceedings, and their ability to recover their investments depends on the specifics of the case, including the type of collateral they hold. In the case of secured creditors, such as those with claims against Toys “R” Us’ owned real estate, their collateral offers some level of protection. However, unsecured creditors often face a higher risk of receiving little to no return on their claims. For more information on navigating such situations, creditors can refer to Pioneer Funding LLC’s guide on what to do when a customer files for bankruptcy.
How does the liquidation of a company affect its bankruptcy proceedings?
Liquidation typically means that the company’s assets will be sold off to pay creditors. In the case of Toys “R” Us, the liquidation involved closing stores and selling assets, which would impact the amount of money available to pay creditors. The process can be complex, and creditors may consider selling their bankruptcy claims to trade claim buyers to mitigate risk and obtain immediate cash. For insights into selling bankruptcy claims, creditors can explore Pioneer Funding LLC’s guide on selling bankruptcy claims to trade claim buyers.
What are the implications for creditors when a large retailer like Toys “R” Us files for bankruptcy?
When a large retailer files for bankruptcy, it can have significant implications for creditors, especially unsecured ones who are last in line for repayment and may recover little to nothing. The case of Toys “R” Us, with its substantial debt and widespread store closures, illustrates the potential scale and complexity of such bankruptcies. Creditors must navigate the proceedings carefully and may consider selling their claims to minimize risk. For an understanding of the risks involved in selling bankruptcy claims, creditors can refer to Pioneer Funding LLC’s overview of the risks in selling and buying bankruptcy claims.
