(Bloomberg) -- Toys “R” Us Inc. has bought more time to decide how many of its 840 U.S. stores the retailer will close, as it aims to get out of bankruptcy in time for the holidays.
The company won court approval Tuesday to pay landlords to extend a 210-day deadline that the bankruptcy code usually mandates to decide whether a company will reject leases. The deadline, which can make it harder for big retailers to reorganize than other companies, could have disrupted the ability of Toys “R” Us to come up with a plan to survive bankruptcy.
By promising to pay some landlords’ attorneys fees and other expenses related to the Chapter 11 case, the company can put off an April deadline to decide which leases to cancel and which to adopt. It’s one of the key decisions Toys “R” Us must make while putting together a new business plan.
As part of the deal, Toys “R” Us also agreed to finish closing all U.S. stores that it has targeted by the end of August. If not, the company will keep open any stores on the shut-down list until after the 2018 holiday season.
The retailer is working to “emerge from Chapter 11 -- and implement their new strategy -- prior to the 2018 holiday season,” Toys “R” Us said in a court filing.
U.S. Bankruptcy Judge Keith L. Phillips in Richmond, Virginia, also on Tuesday approved a settlement with lenders, who had been demanding that the company pledge to continue contracts related to its intellectual property. The deal means the Toys “R” Us name and other related assets will remain with the company as it tries to reorganize instead of potentially being sold separately.
Lower-ranking creditors had wanted to put off any decision about the intellectual property until a reorganization plan was written.
The Wayne, New Jersey-based company filed for bankruptcy in September without a detailed plan to reorganize, which made it one of the rare, large “free-fall” bankruptcies filed in recent years.
The case is In re Toys “R” Us, 17-34665, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).
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