Toys “R” Us Canada is entering a decisive phase in its restructuring, as new court filings reveal plans to launch a formal sale process for the business or its remaining assets. The move comes as the retailer continues proceedings under the Companies’ Creditors Arrangement Act, having first sought creditor protection in early February 2026.
According to filings submitted on March 27, the company will return to court next month seeking approval to begin the Toys “R” Us Canada sale process, which is intended to maximize value for creditors and stakeholders while the business continues operating.
If approved by the court, the Toys “R” Us Canada sale process will move quickly. Interested buyers would be invited to submit bids in May 2026, with the company aiming to select one or more successful bidders by June. A transaction could close as early as mid-July, aligning with the company’s request to extend its creditor protection through that period.
Court materials indicate that the preferred outcome is a going-concern transaction that preserves the brand and some level of operations. However, a piecemeal sale of assets, including inventory and leaseholds, remains a possibility if a full buyer cannot be secured.
Rapidly Shrinking Store Footprint
The retailer’s physical presence has declined significantly in recent years, reflecting ongoing financial pressure. From a network of 81 stores when acquired by Doug Putman’s Putman Investments in 2021, the chain has been reduced to just 22 operating locations.
Recent filings confirm additional closures at St. Laurent Centre in Ottawa and Woodgate Plaza in St. John’s, with the company preparing to return those properties to landlords. These follow earlier closures, including locations at Upper Canada Mall in Newmarket, Niagara Pen Centre in St. Catharines, and a previously shuttered store in Vaudreuil-Dorion, Quebec.
The closures form part of a broader downsizing effort that has seen more than 50 stores shut over the past two years as the company attempted to stabilize operations.
Financial Pressures Mount
Court documents outline a severe financial imbalance. Toys “R” Us Canada is carrying at least $120 million in vendor debt, along with significant obligations to landlords. Over a ten-month period ending in November 2025, the company recorded a net loss of approximately $170 million.
Total liabilities are estimated at $496.78 million, compared to assets valued at $126.85 million. In addition, the company has roughly $36 million in outstanding gift card liabilities, adding further complexity to the restructuring process.
The filings suggest that ongoing inflation, rising labour costs, and persistent pressure from e-commerce have contributed to weakening performance. However, operational challenges tied to supply chain disruptions appear to have played a particularly significant role.
Supply Chain Disruption Accelerated Decline
A key factor in the company’s deterioration was the 2025 receivership of Everest Toys, a distributor connected to the Putman family. Under prior arrangements, major suppliers shipped product through Everest, while Toys “R” Us Canada remained financially responsible for payments.
When Everest entered receivership, the supply chain effectively stalled. Major toy manufacturers, including Mattel, Hasbro, and Spin Master, halted shipments, leaving store shelves understocked during key selling periods. This disruption significantly impacted revenue and contributed to mounting losses.
Real Estate and Liquidity Measures
To generate liquidity, affiliates tied to Putman Investments have been marketing a significant portion of their owned store properties for sale. At the same time, major landlords, including RioCan Real Estate Investment Trust and Cadillac Fairview, have taken steps to terminate leases at several locations due to unpaid rent.
These real estate pressures have further reduced the retailer’s operational footprint and limited its ability to maintain a national presence.
Workforce and Consumer Impact
The restructuring has had a notable human impact. The company’s workforce has declined to approximately 510 employees, down from more than 1,000 in recent years. Reports indicate that some laid-off workers have received minimum statutory severance, raising the potential for legal disputes.
Consumers are also affected, particularly those holding gift cards. While some stores continue to accept them, the suspension of online shopping has made redemption more difficult for customers outside major markets.
