18 September 2017 US toy giant Toys ‘R’ Us has filed for bankruptcy in the US. The company is seeking protection as it tries to restructure its debts. The company has struggled to compete against larger rivals such as Walmart, Target and Amazon and has been especially affected by the move to online purchasing in the toy market. According to GlobalData Retail, online sales of toys have doubled in the last five years, but they still accounted for only 13.7% of the market in 2016. The company’s holdings in Australia and Europe are not affected by the bankruptcy, neither is their joint venture in Asia, but 1,600 US stores and 64,000 employees may be affected. New trading scenarios "The past decade has seen a dramatic change in the domestic toy market with new channels, increased competition, and new technology all having a deleterious impact on the sector and traditional toy stores. Unfortunately, Toys 'R' Us has not responded effectively to these challenges," said the GlobalData Retail managing director, Neil Saunders. However, Toys ‘R’ Us have stated that most of their stores remain profitable and will continue trading through the holiday period, a key time for toy retailers. The company will also be trying to make the most of its new online stores. "A combination of high debt and severe structural changes in the industry created a toxic mix against which Toys 'R' Us had little choice but to restructure and try to put itself on a firmer footing," said Mr Saunders. The company wants to use the bankruptcy protection to restructure and create viability. Existing lenders, as well as a consortium led by JPMorgan are committed to new financing to the tune of $3bn. "Our objective is to work with our debt holders and other creditors to restructure the $5bn of long-term debt on our balance sheet, which will provide us with greater financial flexibility to invest in our business," said Toys ‘R’ Us chief executive Dave Brandon.
Highlight text for solutions to file for bankruptcy – to ask a court for protection when there is not enough money to restructure – to change the way things are organised to account for – to represent (in money or numbers) holdings – assets of the company joint venture – a task done with another company or group dramatic (change) – significant, major deleterious – negative, damaging to trade – to do business a firmer footing – a stronger position to the tune of $3bn – a way of expressing an amount (idiomatic)
Questions Why are Toys ‘R’ Us having these problems? How can filing for bankruptcy help? What are the bankruptcy laws in your country?
Grammar However, Toys ‘R’ Us have stated that most of their stores remain profitable and will continue trading through the holiday period, a key time for toy retailers. The company will also be trying to make the most of its new online stores. Notice the use of the present perfect and the present continuous in this paragraph. Can you find another example and explain how these tenses create a contrast? Highlight for solution The first paragraph contains a similar structure. The contrast is between what has been done so far (present perfect) and the desired effect for the future (from now on ) present continuous. More grammar notes Present continuous Present perfect