Toys "R" Us has filed for bankruptcy protection in the United States and says it intends to follow suit in Canada.
The company filed Chapter 11 documents late Monday in U.S. Bankruptcy Court in Richmond, Virginia and says its Canadian subsidiary plans to seek protection in parallel proceedings under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice.
The chain also said it had secured US$3 billion in financing to stay open while it restructures its outstanding debt and establishes a sustainable capital structure to invest in long-term growth.
Toys "R" Us says the "vast majority" of its approximately 1,600 Toys "R" Us and Babies "R" Us stores around the world and its web portals continue to operate as usual.
The company adds that it is committed to working with its vendors to ensure inventory levels are maintained and products continue to be delivered.
The company says operations outside of Canada and the U.S., including some 255 stores in Asia, are separate entities and are not part of the Chapter 11 filing and CCAA proceedings.
"Today marks the dawn of a new era at Toys "R" Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way," said chairman and CEO Dave Brandonin a statement.
"Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion of long-term debt on our balance sheet."
Toys "R" Us is headquartered in Wayne, N.J., and has nearly 65,000 employees worldwide.