WOODLAWN PARK, N.J. -- Toys R Us is hoping to start liquidation sales at most of its U.S. stores on Thursday, and complete those sales by the end of June.
Toys R Us had hoped to remain in business with about 700 stores still in operation, but abruptly filed for bankruptcy liquidation last week. In February began going-out-of-business sales at 144 of its U.S. stores.
The timetable was disclosed Tuesday at a hearing in U.S. Bankruptcy Court in Richmond, Va. The toy superstore chain, which last week announced plans to dissolve its U.S. operations, came seeking court approval for its liquidation sale plan.
Some store may close earlier, he said, if inventory sells out faster.
The company's distribution centers, which supply the stores, will close before the stores do, said Bill Kosturos, vice chairman of U.S. restructuring for Alvarez & Marsal, one of the companies advising Toys R Us in the liquidation. Otherwise, the operation is expected to take 14 weeks.
Toys R Us, based in Wayne, N.J., cited competition from discount chains and online retailers as reasons it was unable to go ahead with a restructuring plan.
Toys R Us will ask U.S. Bankruptcy Court Judge Keith Phillips to approve the liquidation timeline after the close of a hearing on the liquidation plan.
The Toys R Us liquidation plan was called unfair to the toy manufacturers during an eight-hour court hearing where lawyers stood in lines to object to the plan.
Phillips was not swayed by arguments by vendors that they would be better off if the Chapter 11 liquidation case was converted to a Chapter 7 liquidation, with the sale of assets placed in the hands of a court-appointed trustee.
"It's a tough decision, in the way that pulling life support from a brain-dead patient is a tough decision," said James Wilton, attorney for the vendor Thorley Industries.
The judge said it would be premature to make that decision at this time.
Toys R Us knew its plan to rebuild after bankruptcy was in trouble as early as Black Friday -- the critical shopping day after Thanksgiving -- last year, but it held out hope that it could salvage it until lenders pulled support at the beginning of March, according to a top adviser who testified.
One adviser for Toys R Us, Joseph Malfitano of liquidation specialists Malfitano Partners, described the Toys R Us sell-off as "probably the largest retail liquidation in the country's history."
Attorneys for utility companies, advertising and marketing companies, and cardboard and packaging suppliers also showed up for the court hearing to stake a claim for any money generated by the liquidation process. The hearing drew so many attorneys that a second courtroom, with an audio link, had to be used to hold the overflow crowd.
More than four dozen toy manufacturers, including big names like Lego and Mattel, have filed objections to Toys R Us' liquidation plans. Toys R Us has promised to pay for any toy shipments received after March 5, but attorneys for the creditors committee have stated that manufacturers are owed $450 million for goods shipped to Toys R Us earlier.
Toys R Us is still hoping that it will be able to keep up to 200 U.S. stores open as part of a package deal to sell its Canadian operations. Potential new owners of the Canadian business might be interested in taking over the operations of some of the most profitable Toys R Us stores in this country.
David Kurtz, vice chairman and head of global restructuring at the investment bank Lazard, Ltd., which was advising Toys R Us during its restructuring, said Toys R Us executives began to realize that they might not meet their holiday projections as early as Black Friday, the kickoff of the Christmas toy shopping season.