The hedge funds that now own Toys ‘R’ Us have decided to keep the bankrupt retailer’s iconic name and attempt to revive its stores as “a newly-established, independent U.S. business.”

In a court document, the funds, who are Toys ‘R’ Us’ controlling lenders, said it had received “qualified bids” for the company’s intellectual property but had determined they “were not reasonably likely to yield a superior alternative” to a bankruptcy reorganization.

“The debtors have determined … to cancel the intellectual property auction and reorganize [Toys ‘R’ Us]” in accordance with a plan filed with the bankruptcy court last month, the funds said.

Under that plan, a “newly-established, independent” company would “invest in and create new, domestic, retail operating businesses under the Toys ‘R’ Us and Babies ‘R’ Us names, as well as expand its international presence and further develop its private brands business.”

After filing bankruptcy a year ago amid crippling debt and competition from online retailers, Toys ‘R’ Us held liquidation sales and closed all of its 700-plus retail locations.

The bankruptcy court in May approved procedures for the sale of the intellectual property assets, including the Toys ‘R’ Us name and website domains. Proceeds from the sale would have been used to repay creditors.

The cancellation of the auction is “a surprising change of heart from the creditors who were prepared to shut down the company and sell it for parts just a few months ago,” CNN Money said. “Apparently, the various hedge funds have concluded that bringing back the stores will be more valuable than whatever they could get from selling off the brand.”

The funds said in the court papers that the reorganization plan offered a better alternative with respect to the probable economic recovery to creditors. They also cited benefits to other direct and indirect stakeholders, including “expected expansion of employment opportunities for workers and merchandising opportunities for toy and other vendors.”

According to The Wall Street Journal, the closure of Toys ‘R’ Us left an $11 billion hole in the toy industry and about 33,000 people without jobs.





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