Toys “R” Us Canada has obtained court approval to explore potential sale opportunities as it faces financial challenges. Judge Jane Dietrich sanctioned a process that will enable the distressed retailer to seek investments or buyers for either the entire business or its individual assets by June 2026.
The company has not specified the exact assets it is offering, but it has estimated its total asset value to be approximately $126.8 million. As the company navigates through these trying times, it anticipates concluding with no more than 18 operational stores by the time a sale may be finalized. Additionally, records indicate that the retailer holds 162 trademarks, providing potential buyers with various options in their acquisition strategy. The bidding process is set to commence in May, with a buyer likely to be selected in June. If sufficient interest is generated, an auction format may be employed to maximize offers. The company expects to seek court approval for any subsequent sales in June, targeting a deal closure by July.
This move to solicit sales and investments follows Toys “R” Us Canada filing for creditor protection in February 2026, amid growing debt and numerous lawsuits from suppliers and landlords owed significant sums. The process permits bids from the company’s owner, Putman Investments, as well as its affiliates. Based in Ancaster, Ontario, Putman Investments acquired Toys “R” Us Canada in 2021 and also manages other retailers including HMV and Sunrise Records.
The stakeholders of Toys “R” Us Canada, particularly the suppliers owed approximately $120 million, have not opposed the search for new investors or buyers. However, Allied World Specialty Insurance Company, which insures nonpayment claims for many suppliers, expressed concerns regarding the sales process proposed by Toys “R” Us Canada. Prior to the court hearings, Allied stated that the sales strategy was devised without adequate consultation with unsecured creditors, raising potential issues regarding fairness and integrity in the process.
Allied World argued for more stringent safeguards to oversee the involvement of insiders, given that Putman Investments wholly owns Toys “R” Us Canada, along with a majority of its properties. Lawyers representing Allied emphasized the need for heightened scrutiny due to previous transactions, where Putman sold five properties worth $42 million to a related party for $38 million shortly before the company sought creditor protection.
Following negotiations, Toys “R” Us Canada agreed to amend its sales process in a way that satisfied Allied’s concerns. Allied World has filed over $66 million in claims on behalf of its 36 suppliers linked to Toys “R” Us, indicating a strong interest in the transparency of the sales proceedings. Notably, Allied is a Delaware-based firm and part of the Fairfax Financial Holdings portfolio, which previously acquired Toys “R” Us Canada for $300 million during its last creditor protection filing in 2018 before transferring ownership to Putman Investments.
The ongoing situation at Toys “R” Us Canada highlights the complexities faced by retailers in the current market, especially those burdened by substantial debts and operational challenges. The outcome of the potential sale or investment process will significantly affect the company’s future and its ability to restructure effectively amidst financial turbulence.
