Toys ‘R’ Us Taj and TRU debtors’ Chapter 11 plan effective Jan. 23

By Caroline Salls

Pittsburgh, Jan. 24 – The Chapter 11 plan filed by Toys “R” Us, Inc.’s Taj and TRU Inc. debtors took effect on Wednesday, according to a notice filed with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The plan was confirmed on Dec. 17.

As previously reported, last week the company announced that a settlement was reached with an informal group of Taj debtors noteholders, an informal group of B-4 lenders and the official committee of unsecured creditors appointed in the Toys “R” Us Chapter 11 case.

Toys “R” Us said the intercompany settlement resolves all matters concerning licensing agreements between Asian joint venture Toys (Labuan) Holding Ltd., its subsidiaries and Geoffrey, LLC, source-code ownership, private-label goods and trademarks and all other intercompany issues, including professional-fee allocation.

Intercompany settlement

Under the settlement, Geoffrey will enter into new 15-year license agreements with the Asia joint venture and the company’s French business.

The Asia joint venture and/or its subsidiaries will pay Geoffrey a 2% net royalty rate under the new licensing agreements and will relinquish its rights to $26.28 million it claims it is owed by Geoffrey under a subsidy agreement.

The joint venture or its subsidiaries will pay $3.72 million to Geoffrey on the Chapter 11 plan effective date.

In addition, the Asia joint venture will pay $6 million to Toys “R” Us - Delaware, Inc. on April 30.

The Taj debtors will pay Toys Delaware $3 million in settlement of professional fee allocation disputes.

Toys Delaware will deliver the source code and Oracle data to the Asia joint venture, which, following receipt of the source code and data, will pay Toys Delaware $5 million, plus unpaid invoiced amounts, for a total of $7.6 million.

Toys Delaware will enter into a transition services agreement to provide existing IT services to the joint venture, as well as transition and migration services set in the agreement, and the joint venture will pay Toys Delaware a $1.5 million monthly fee.

Funds of MAP 2005 Real Estate, LLC will be used to resolve intercompany fee allocation disputes, including through payment to Toys Delaware of $1.25 million, as well as payment to the Taj debtors of $1.25 million, which will be contributed to TRU Inc. as a fund for creditors.

The informal group of B-4 lenders and the creditors’ committee agreed to withdraw their plan objections.

Creditor treatment

Under the plan, holders of Taj senior notes guaranty claims against the TRU debtors have waived their right to a distribution.

Holders of Propco II mortgage loan guaranty and Giraffe junior mezzanine loan guaranty claims, 7 3/8% senior notes claims, 8¾% unsecured notes claims and general unsecured claims will receive a share of a “silo” recovery after all senior claims are paid in full.

TRU interests will be cancelled, provided that these interests may be issued under the Toys Delaware debtors’ plan.

Holders of Taj senior notes claims will receive a share of any liquidation and sale proceeds remaining after senior creditors are paid in full and initial shares and subscription rights.

Holders of Taj general unsecured claims and interests in TRU Europe will receive a share of any liquidation and sale proceeds remaining after payment in full of senior claims.

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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