The Toys R Us Bankruptcy And What It Means For Employees

A few months ago, Toys R Us, an international retail toy chain, announced that it had filed for bankruptcy. The company was over its head in debt, trying to stay open just long enough to prosper through the holiday season. Not much was mentioned in regards to how the store was going to manage things after the holidays, or what the bankruptcy filing meant for employees. Bankruptcy lawyers, and those that know and understand how this process works, had a good idea of which types of bankruptcy were filed, and what would happen next. Here are the types of bankruptcy filed by this company, and what it means for you, its employee(s).

Chapter 7

A Chapter 7 bankruptcy means that there is a trustee assigned to the company to manage the debts and creditors until the bankruptcy is discharged, or until the company figures out what it plans to do. The company is required to liquidate as many assets as possible to pay off company debts, which means that dozens of its stores will be closed and the properties sold to pay debts. Some stores may remain open, but only if the trustee feels they would be a boon to the community/city in which these properties conduct business.

As for the employees in the closing stores, they will be let go. If there is another store location close by, the employees may be offered a transfer, but transfers are generally reserved for managerial staff. General store employees are unemployed, but may reapply to any store in the company that has an open position.

Chapter 13

The retail chain remained open through the Christmas season, due to some quick legal thinking and the lawyers providing the Chapter 7 services. The company opted to file for a Chapter 13 bankruptcy as well, which helps companies completely restructure their business once investors and creditors are paid. This is also why so many locations are closing; the restructuring process is underway. The retail chain is going to remain as an online presence with limited brick and mortar locations internationally, something which has always proven difficult to do when your competition has been online e-tailers all along.

Employees of brick and mortar locations may opt to become phone representatives, or industry pickers and packers. Of course, this alternative to unemployment will require relocation. It is entirely up to the employees what they will do, but the end result is that thousands of people will be out of work halfway through the new year.

If you need more information, reach out to Chapter 7 lawyers.