US retailer Toys R Us has entered a settlement agreement with creditors groups, including vendors, in a move to liquidate in bankruptcy.
The company filed documents regarding the settlement with the court of Eastern District of Virginia.
In the filing, the retailer plans to resolve certain debtors’ chapter 11 cases, maximise stakeholders’ recoveries, and avoid litigation of myriad disputed issues under the settlement.
As per the settlement agreement, the retailer plans to create economic consideration to holders of administrative claims that includes a baseline recovery of $180m, including $160m funded into the Merchandise Reserve and $20m raised from the liquidation of Toys Delaware assets.
A group of secured lenders will also receive at least 50% of the $1bn owed by them under pre-bankruptcy claims.
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By GlobalDataA group of vendors also claimed $800m owed to them for merchandise shipped to the toy retailer.
The filing also states that the debtors agreed to waive all claims and causes of action arising under chapter five of the Bankruptcy Code, which rounds off to approximately $1bn in the preliminary analysis.
However, several vendors, led by Crayola, objected to various aspects of the liquidation plan, stating that the retailer prioritised certain lenders and left vendors who supported the company in bankruptcy.
Crayola also alleged in court filings at the beginning of this year that the retailer accelerated product orders in January and February, reported Retail Dive.
