After bankruptcy and layoffs, Toys 'R' Us contemplates a comeback

The folks in charge of selling off Toys 'R' Us assets after the bankrupt global retailer shut down nearly 1,000 stores and laid off over 33,000 people this year have decided to cancel the auction and revamp the brand instead.

According to court papers filed on Monday and brought to our attention by the Wall Street Journal, the lenders currently controlling what remains of Toys 'R' Us believe the brand is strong.

They've now canceled a planned bankruptcy auction for Toys 'R' Us assets -- including mascot Geoffrey the Giraffe -- even though they state that they received some legit bids for some of the stuff that was up for sale.

"Notwithstanding the receipt of Qualified Bids for certain of the Intellectual Property Assets, the Debtors have determined, in consultation with the Consultation Parties, to cancel the Intellectual Property Auction and reorganize Debtor Geoffrey pursuant to the Second Amended Chapter 11 Plans of Toys Delaware Debtors and Geoffrey Debtors," reads an excerpt of the notice of auction cancellation. "Which Plan, among other things, contemplates a new, operating Toys 'R' Us and Babies 'R' Us branding company that maintains existing global license agreements and can 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."

This ill-defined plan is pitched as a superior alternative to auctioning off Toys 'R' Us assets, both as a way to facilitate "the probably economic recovery of creditors" and to create jobs by establishing a new independent U.S. business using said assets. 

While it's yet unclear whether any of those jobs will actually materialize, the Journal reported yesterday that some of the current Toys 'R' Us stakeholders (specifically Kohlberg Kravis Roberts and Bain Capital, two of the three companies that conducted a buyout of Toys 'R' Us in '05 and piled it high with outstanding debts) have created a $20 million fund to pay severance to laid-off Toys 'R' Us workers.

However, labor advocacy group Rise Up Retail estimates that Toys 'R' Us workers are owed much more -- roughly $75 million in severance.

"Bain and KKR made an investment that resulted in a lot of harm for families and communities, and the responsible thing to do is step up and pay workers what they are owed," Rise Up Retail campaign manager Carrie Gleason told the Journal.