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Toys ‘R’ Us Australia falls into administration

Toys ‘R’ Us Australia and sister brand Babies ‘R’ Us have fallen into voluntary administration, following the collapse of US-based Toys ‘R’ Us Inc.

McGrathNicol partners Jason Preston, Keith Crawford and Barry Kogan were appointed as the administrators on Monday after a bid to purchase the Australian business was withdrawn.

McGrathNicol said in a statement on Monday that all Toys ‘R’ Us Australia stores will continue to trade as options for a potential sale of the standalone Australian business is explored.

44 retail stores and around 700 permanent staff are caught up in the administration.

Administrators said on Monday that they will now undertake an “urgent sale” process for the business as a going concern, or a possible recapitalisation.

It is also expected that employees will be paid their entitlements in full either through a sale process, recovered funds from the sale of stock, or the Commonwealth Government’s Fair Entitlements Guarantee Scheme.

A first meeting of creditors is due to take place before the end of next week.

Toys ‘R’ Us Inc has been seeking to offload its international businesses for several months amid a liquidation process that is seeing more than 700 stores wound down in the US.

It has already entered into agreements to sell off its Canadian and European businesses, while its US operations remain in play.

Toys ‘R’ Us Inc has also said that multiple offers have been made for Toys ‘R’ Us Asia, which it owns an 85 per cent stake in.

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.

Toys ‘R’ Us Australia’s loyalty program has also been suspended, but VIP discounts will be honoured.

Online orders will be delivered where goods have been paid for in full and stock is available.

The Australian Toys ‘R’ Us business has been struggling for some time, booking millions in losses in recent years, but was being expanded under the leadership of Dianne Guerreiro, who as of late last year was actioning plans to open new stores.

The collapse of Toys ‘R’ Us sister brand Babies ‘R’ Us is the latest in a long line of retail collapse in the baby goods category in the last 18 months, that has now claimed the scalps of three of four of the largest players in the sector.

UPDATED – 22/05/2018 9:07 AEST

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