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A recovery of Toys "R" Us could be underway.
Jerry Storch, a former CEO of the late-born toy chain, worked with several investors on a retailer's restart plan in the United States, according to people familiar with the situation, who asked not to be identified because the the discussions are private.
The remaining stores in the once prosperous chain are expected to close by Friday. The 70-year-old retailer has three stores in the Indianapolis area – in Castleton, Greenwood and at 9251 East Washington St.
But a complete closure might not be permanent.
Storch uses Credit Suisse Group AG as a financial advisor, and discussions included Fairfax Financial Holdings Ltd., the investment company that acquired the Canadian unit of Toys "R" Us, said some people.
Any return is considered to be faced with long odds because of the extent to which the former market giant has fallen, people have said. It is also feared that it is too late to restart the business in time for the Christmas shopping season, they added.
The shares of Hasbro Inc. and Mattel Inc. initially absorbed their losses in New York on the report. The two toy companies have been affected by the demise of their biggest trading partner.
For a successful recovery, the Storch Group is expected to win a bankruptcy auction for the IP of the channel in about a month. The real estate portfolio is sold separately, people say. Often, when a chain of retailers sells its brands and logos, it does little. Competitors often purchase the rights to prevent them from being used by another competitor.
But that does not seem to be the case with Toys "R" Us, a liquidation that leaves billions of dollars to be won. Competition for its brands, including Babies "R" Us, is expected, according to some people. This interest illustrates the number of observers who considered the retailer's activities as recoverable, at least without the unsustainable debt that had driven him into bankruptcy.
Representatives Fairfax, Toys "R" Us and Storch declined to comment. Credit Suisse did not immediately respond to a request for comment.
Past experience
Storch took over the chain shortly after Bain Capital, KKR & Co. and Vornado Realty Trust took Toys "R" Us in a debt transaction in 2005. During his tenure, the profit before interest, taxes and depreciation reached $ 1 billion. After his departure in early 2013, the retailer has not reached this level yet.
After leaving Toys "R" Us, Storch founded a consulting company before joining Hudson's Bay Company in early 2015 to become CEO of the Chain of Commerce. department stores in trouble. He resigned in October after a deeper loss than expected.
Fairfax, the insurance group led by billionaire investor Prem Watsa, paid $ 237 million to the Canadian unit of Toys "R" Us in April. Fairfax and Hudson's Bay are both based in Toronto.
Storch has recruited other former executives under the Toys "R" Us initiative. He has also hired shopping center owners about space rental, people said.
His plan is to have several hundred stores that house both toy and baby brands under one roof, said one of the people. The company began combining the two units when Storch was CEO as a way to create a unique shopping experience for parents with multiple children. By the end of last year, the company had about 200 of these hybrid sites in the United States.
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