Toys ‘R’ Us sets procedures for sale of closing-store assets, leases

By Caroline Salls

Pittsburgh, Feb. 28 – Toys “R” Us, Inc. requested court approval of the bid procedures for the proposed sale of real property and leases, according to a motion filed with the U.S. Bankruptcy Court for the Eastern District of Virginia.

Since it will no longer be operating the 182 stores it identified as initial closing stores, the company said it is now seeking approval of the bid procedures to capitalize on those assets.

Under the proposed bid procedures, Toys “R” Us said bids would be due by 5 p.m. ET on March 26, an auction would be held on March 29 and the sale hearing would be scheduled for April 12.

“The debtors believe that the proposed timeline and auction will help the debtors capture substantial value for their stakeholders by capitalizing on the value of their owned property and/or long-term leases at below-market rates,” the motion said.

“Not making every effort to sell the rights tied to such properties for the maximum value prior to the April 16 deadline to assume or reject such unexpired leases would abdicate the debtors’ responsibility to maximize value for their stakeholders and would drain estate resources in the form of paying unnecessary property taxes and rent.”

Toys “R” Us said the bid procedures allow it to agree to reimburse out-of-pocket fees and expenses of one or more qualified bidders and/or agree to pay these bidders a “work fee” or other similar cash fee to encourage the submission of qualified bids or lead to a competitive bidding and auction process.

The total amount of all expense reimbursements and work fees may not exceed $50,000 per qualified bid or $1 million total.

In addition, the procedures allow for the payment of a break-up fee and expense reimbursement of no more than 3% of the purchase price if any stalking horse bidder is selected but is not ultimately the winning bidder.

Toys “R” Us is a Wayne, N.J., toy retailer. The company filed for bankruptcy on Sept. 19, 2017 under Chapter 11 case number 17-34665.

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