Toys R Us Canada is seeking to sell all or part of its business, or selected assets, as part of its ongoing court-supervised restructuring process.

Court-appointed Monitor Alvarez & Marsal has submitted a sales-in-solicitation proposal (SISP) to the Ontario Superior Court of Justice (Commercial List) to advance the sales effort.

Pending the court’s approval of the application under the Companies’ Creditors Arrangement Act, the retailer plans to seek court approval in April to launch a formal sale process aimed at attracting buyers for either the entire business or selected assets. The company, which obtained creditor protection in early February, intends to continue operating while the process unfolds.

If the court signs off, bids are expected in May, with a preferred buyer or buyers identified by June and a deal potentially closing by mid-July. The company is also seeking to extend its creditor protection to cover that timeline.

As is common in such instances, Alvarez & Marsal is likely to appoint a commercial real estate brokerage to co-ordinate the sale or lease of any properties under the SISP once the restructuring effort reaches that stag.

The SISP’s aim is to enable the retailer to remain a going concern with the brand and at least part of the business and its operations preserved to However, a breakup scenario — involving the sale of inventory, leases and other assets — remains a fallback option.

The company’s store network has already been sharply reduced. Since being acquired by Putman Investments in 2021, the chain has shrunk to 22 locations from 81. According to the latest court filing, Toys R Us intends to close stores at Ottawa’s St. Laurent Centre and Woodgate Plaza in St. John’s, NL, as part of the SISP. The filing also states that Toys R Us closed 50 locations in its latest fiscal year that concluded February 1.

Financial disclosures highlight the scale of the challenge. The retailer is carrying at least $120 million in vendor debt and faces total liabilities of approximately $496.8 million and a working-capital deficiency of about $369.3 million against roughly $126.9 million in assets. The chain posted a net loss of about $170.4 million over a 10-month period ending in November 2025 and has about $36 million in outstanding gift card obligations.

The filing points to a mix of economic and operational pressures behind the decline, including inflation, higher labour costs and competition from e-commerce. According to Alvarez & Marsal, the retailer has also been caught up in supply-chain disruptions tied to the COVID-19 pandemic that created financial difficulties for many Canadian retailers.

Toys R Us also struggled further as unpaid suppliers required deposits, or other compressed, or cash-only payment terms.

In February, the court approved an amended initial restructuring application, allowing Toys R Us to borrow $13 million under a debtor-in-place credit facility. As part of the SISP application, Toys R Us is seeking to increase the DIP facility to $15 million.

The retailer also wants to disclaim the Ottawa and St. John’s store leases, along with two other leases tied to spaces in St. Catharines, Ont., and Vaudreil-Dorion, Que., and return them to landlords. Meanwhile, Toys R Us plans to use DIP funds to make other lease payments.

The chain also wants the court to extend a stay of proceedings against it until July.

As Connect previously reported, the completed store closures include all of the retailer’s B.C. locations. As part of the process, Toys R Us appointed Neil Taylor as chief restructuring officer to assist with navigating the CCAA proceedings while maintaining operations and continuing to serve customers, partners and employees.

Toys R Us is a national specialty retailer of toys and baby products, operating stores and e-commerce platforms across the country. The company has been serving Canadian families since 1984.

Court documents and updates on the CCAA proceedings can be accessed on Alvarez & Marsal’s website.

Photo: CNW Group/Toys R Us Canada