Toys R Us explores possible bankruptcy to deal with debt

The company has reportedly hired a law firm to help restructure $400 million in debt.
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Toys R Us is exploring the possibility of filing for bankruptcy in a bid to manage its debt.

According to reports, the global retailer is considering bankruptcy as part of its potential plan to restructure around $400 million in debt, which is due in 2018.

To help manage the payments, sources familiar with the matter have revealed that Toys R Us has hired lawyers from Kirkland & Ellis.

Amy von Walter, spokeswoman for Toys R Us, said in a statement: “As we previously discussed on our first quarter earnings call, Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing,” reports CNBC.

"We expect to provide an update about these activities, as well as the many initiatives underway to provide an outstanding customer experience in our global retail locations and webstore during the holiday season, during our second quarter earnings call."

CNBC also notes that despite the retailer’s decision to work with a law firm, it does not necessarily mean that Toys R Us will file for bankruptcy, as many companies hire law firms to help manage debt.

This news comes as the retailer revealed its results for the first quarter of fiscal 2017, citing a decline in profits.

The company will hold is second quarter earnings call next Tuesday. 

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