Toys 'R' Us said at a bankruptcy court hearing yesterday that it was working hard to maximise payments to suppliers and lenders, as it starts to close 735 big-box toy stores across the US.
More than 50 suppliers, including Barbie maker Mattel and Lego, have objected in some form to the proceedings by the storied toy retailer to liquidate its US business, putting 30,000 jobs at risk.
Toys 'R' Us had been trying to reorganise under U.S. Chapter 11 but last week said those efforts had failed and it was quickly running out of cash.
It is also winding down its UK business, but is looking for a buyer for operations in Canada, Europe and Asia.
Some trade vendors are demanding the company return any unpaid inventory rather than selling it and using going out of business sales to pay secured lenders and bankruptcy lawyers, at their cost, court papers showed.
"We're making every effort to make sure (trade vendors) will be paid in full," Lazard's David Kurtz, who is advising Toys 'R' Us, testified at a hearing at US Bankruptcy Court in Richmond, Virginia.
The company is seeking approval for a March 26 deadline for bids for each of its foreign businesses, apart from the UK, followed by an auction on March 29.
It is also seeking approval for a series of US liquidation procedures including a halt to more than $450m in supplier payments as part of a plan that experts told Reuters could cause many small toy makers to disappear.
Toys 'R' Us was the last remaining speciality toy retailer in the US. Hundreds of companies relied on its big-box stores as a showcase for both innovative toys as well as classics.
Under trade agreements, vendors were required to ship goods to Toys 'R' Us on unsecured trade credit.
In a court filing, Lego said any "wind-down must be implemented in a manner that is fair and equitable to all" of the company's creditors.
The US Trustee, a bankruptcy watchdog, has also objected, saying that while it is "resigned" to the company's future, it is concerned about certain of the procedures and relief proposed as part of the liquidation.
