Toys "R" Us Inc. filed for Chapter 11 bankruptcy protection late Monday, as the U.S.'s largest toy retailer couldn't deal with its rising debt load.
The Chapter 11 filing, which is one of the largest ever for a retailer, comes it struggled to deal with competitors such as Amazon (AMZN) , Walmart (WMT) and Target (TGT) , and ahead of the holiday season.
The company expects its approximately 1,600 Toy "R" Us and Babies "R" Us stores and online stores to operate as normal while the proceedings are taking place.
Toys "R" Us filed for the relief in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond, Va.
The company said it intends to use these court-supervised proceedings to restructure its outstanding debt and establish a sustainable capital structure, adding that bankruptcy protection will enable it to invest in long-term growth.
The company's Canadian subsidiary is also seeking protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice.
"Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion of long-term debt on our balance sheet," Chairman and CEO Dave Brandon said in a statement.
The restructuring will allow the company to invest in the business, and "continue to improve the customer experience in our physical stores and online, and strengthen our competitive position in an increasingly challenging and rapidly changing retail marketplace worldwide," Brandon said.
