Toys R Us Canada has filed for creditor protection under the Companies’ Creditors Arrangement Act as it evaluates strategic alternatives and restructures its business.
In a Feb. 3 announcement and related court filings, the company said it is reducing its retail footprint and reviewing options to stabilize operations.
All 22 Toys R Us locations in Canada, each of which includes a Babies R Us presence, will remain open during the CCAA process.
However, the retailer has suspended its e-commerce platform while it assesses its restructuring strategy.
Court documents show the company owes approximately $120 million to vendors, along with “substantial amounts” to landlords.
Toys R Us Canada cited sustained operational and financial pressures in recent years, including declining sales in 2023 and 2024 and a growing number of unprofitable stores.
The retailer previously took steps to cut costs, improve margins and rationalize its store base, including closing underperforming locations, reducing headcount and negotiating with suppliers.
The company previously filed for CCAA protection in 2017 alongside the broader Toys R Us Chapter 11 proceedings in the United States.
Unlike its U.S. counterpart, Toys R Us Canada did not close stores during that restructuring and was unable to exit leases for underperforming locations, a factor it now identifies as contributing to its current financial position.
The CCAA process allows companies to restructure their finances while continuing operations and seeking a path to repay creditors.
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