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Financial hardships leave toy company in need of reorganization

On Behalf of | Sep 12, 2017 | Chapter 11 |

When a business is one of the frontrunners in its respective field, the level of success achieved can be substantial. However, as the number of competitors increases, some companies in Maryland and elsewhere could begin to fall behind, which can lead to financial difficulties despite previous earnings. Should these hardships persist, a business could experience a need for financial reorganization in order to remain operational.

Toys “R” Us began as a vendor for cribs and carriages, and eventually expanded its collection to include toys for children. The company achieved a significant amount of success over almost 60 years of operation. However, with an increase in competition and a change in business models, the company has recently fallen behind financially, and is currently facing up to $5 billion in debts.

According to reports, its creditors are growing less patient in light of the reduction in profits. The company is currently weighing its options, which include pursuing bankruptcy protection while closing an unspecified number of stores and restructuring finances and operations. The recent boom of online shopping and increases in competition have created challenges for many businesses, some of which have experienced drops in profits and subsequent debts that can be challenging to overcome.

Businesses that face monetary struggles may wish to protect their longevity by pursuing debt relief, but the process can be complex. By speaking with a bankruptcy attorney, a client in Maryland could obtain advice in covering every available option, which may prove crucial to forming a plan for financial reorganization. An attorney can address a client’s concerns and needs and assist in pursing the best possible outcome through the necessary channels.

Source: northjersey.com, “Toys ‘R’ Us needs to play catch-up”, Joan Verdon, Sept. 9, 2017

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