Will the Toys ‘R’ Us Bankruptcy Hurt Other Companies?

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It was only a few weeks ago that Toys ‘R’ Us announced it would file for Chapter 11 bankruptcy, just shy of the holiday season. But Toys ‘R’ Us may not be the only company to suffer as it takes this step to restructure its debts. For toy manufacturers Hasbro and Mattel, Toys ‘R’ Us is the second biggest customer (behind Wal-Mart). Will the bankruptcy hurt those companies?

When the first rumors started to swirl regarding a potential bankruptcy filing by the retail toy giant, shares for Mattel and Hasbro fell slightly. But when the rumors turned out to be true, Hasbro and Mattel bounced back. And going into the holiday season, it seems they will do just fine. The two companies have lowered their dependence on brick-and-mortar toy stores as online shopping becomes more and more popular.

However, some questions remain. Mattel and Hasbro are Toys ‘R’ Us’ second and third largest unsecured creditors. Toys ‘R’ Us owes Mattel $135.7 million and Hasbro $59.1 million. If Toys ‘R’ Us is unable to restructure properly, the other two companies may suffer reduced cash flow.

Other Major Retail Companies That Have Filed Bankruptcy in 2017

  • Alfred Angelo made waves in July after announcing it would file for Chapter 7 bankruptcy. The company was a major supplier of wedding dresses. Many brides were left out to dry when the company shuttered.
  • Gymboree, the children’s clothes retailer, failed to make a debt payment in June and filed for Chapter 11 shortly afterward.
  • In March, Radio Shack filed for bankruptcy protection for the second time in as many years. Sprint-only stores will replace many of its hybrid stores.
  • Gander Mountain, known for camping and hunting supplies, filed for Chapter 11 in March. It was auctioned in May and sold to Camping World Holdings.

If you are struggling with your business and believe that bankruptcy could help, our Washington DC law firm can help.

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