Toys “R” Us Canada Wins Court Reprieve — But More Store Closures Loom

Toys “R” Us Canada has secured additional time to restructure its struggling business after an Ontario court extended its creditor protection until May.

Ontario Superior Court Justice Jane Dietrich approved the extension, allowing the retailer to continue operating while shielding it from creditors demanding payment. The move gives the company what the court described as “stability and breathing room” to pursue a potential sale or investment process.

Creditor protection allows insolvent businesses to temporarily pause repayments while they determine their next steps. Court filings show Toys “R” Us Canada owes at least $120 million to vendors, along with substantial sums to landlords.

Major Creditors and Mounting Pressure

The retailer’s creditor list includes some of the biggest names in the toy industry, such as Lego, Hasbro, Mattel, Spin Master Corp., and Jazwares. Prominent commercial landlords are also among those owed money.

Ahead of filing for protection, multiple creditors launched legal claims over unpaid bills, though those cases have yet to be tested in court. The company has acknowledged facing litigation related to lease agreements and store closures prompted by ongoing operational challenges.

More Store Closures on the Table

Over the past two years, Toys “R” Us Canada has closed 53 stores, citing inflation, rising labour costs, supply chain disruptions, and a rapid shift toward e-commerce. Only 22 locations remain, but further closures are now possible.

The court has authorized the retailer to proceed with additional liquidation sales if lease negotiations fail. However, any further shutdowns must receive approval from Alvarez & Marsal, the court-appointed monitor overseeing the restructuring process.

Filings indicate plans to close locations at Upper Canada Mall in Newmarket, Ont., and Niagara Pen Centre in St. Catharines, Ont., following lease termination agreements. Affiliates of owner Putman Investments are reportedly marketing several properties tied to the retailer.

Gift Cards No Longer Accepted

In another blow to customers, Toys “R” Us Canada has stopped accepting gift cards as part of its creditor protection proceedings. At the time of filing, the company had more than $36 million in outstanding gift card obligations.

With online sales still paused during a website overhaul, customers holding unused gift cards were required to redeem them in-store before the deadline.

Workforce and Ownership Background

Court documents show the retailer employed about 562 workers at the time of filing — including store and corporate staff — though further layoffs have since reduced headcount.

Putman Investments acquired Toys “R” Us Canada in 2021. The brand previously underwent restructuring in 2018 after its U.S. parent company entered bankruptcy proceedings.

The extended creditor protection provides time for Toys “R” Us Canada to seek a buyer or restructure operations. However, with declining store numbers and mounting debt, the coming months will be critical.

For now, the retailer remains open — but its long-term future depends on whether it can secure new investment, renegotiate leases, and adapt to Canada’s evolving retail landscape.