After months of speculation, Toys “R” Us Australia has entered voluntary administration, along with its sister brand Babies “R” Us, after a bid to purchase the business fell over this week.
“The directors of TRU Australia resolved to appoint voluntary administrators upon withdrawal of the bidder in the sale process that was being undertaken for the business,” documents seen by My Business state.
“The administrators have assumed control of TRU Australia’s affairs and have entered into possession of assets.”
“All TRU Australia stores will remain open and continue to trade while the administrators urgently assess prospects of completing a going concern sale of the business or a recapitalisation through the voluntary administration process.”
It is believed the move will impact as many as 44 retail stores and around 700 permanent staff. The collapse follows speculation about the business’ future after the US arm went under in March this year.
At the time, the local business dispelled rumours that it, too, was in danger of imminent collapse. Yet an insider suggested Toys “R” Us Australia was in deeper financial strife than it was letting on.
A current Toys “R” Us employee told My Business they have been told that their jobs are safe “for the moment” and that their entitlements are still being catered for.
A first meeting of creditors is due to take place before the end of next week.
Refunds for sold items will no longer be offered by Toys “R” Us Australia, while gift cards and vouchers will only be honoured if an equivalent amount is spent in cash and cannot be redeemed online.
Its loyalty program is also on hold, and online orders will be delivered where there is stock available and payment has been made.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.