Burdened by more than $5 billion of debt, Toys R Us Inc. sought Chapter 11 protection in federal court in Richmond, VA, on Sept. 18, 2017. Kramer Levin represented the Official Committee of Unsecured Creditors, which consisted of LEGO Systems Inc., Mattel Inc., Huffy Corp., The Bank of New York Mellon, Simon Property Group Inc., KIMCO Realty, Evenflo Co. Inc., Veritiv Operating Co. and Euler Hermes North America Insurance Co.
Throughout the Chapter 11 cases, the committee advocated on behalf of unsecured creditors. Among other things, the committee (i) negotiated valuable protections and improvement in the debtor-in-possession (DIP) financing orders, (ii) negotiated for significant changes to the debtors’ proposed executive compensation program, and (iii) undertook a comprehensive investigation of potential causes of action in an effort to unlock value from estate claims for unsecured creditors. In addition, following the March 2018 announcement of the liquidation of the debtors’ domestic businesses, the committee played a central role in spearheading negotiations among the major parties in interest that led to a global settlement agreement among the debtors, the committee, an ad hoc group of B-4 lenders, an ad hoc group of administrative claimants and other parties. The committee was further instrumental in negotiating a global settlement at the end of 2018 that resolved inter-debtor issues, and the Chapter 11 plans of the various debtor entities were confirmed in early 2019.
The committee was also heavily involved in the auction and sale processes for the debtors’ various real estate and other assets, including the sale of all of the assets of the debtors’ PropCo II entities, which was effectuated through a Chapter 11 plan for the PropCo II entities that was confirmed on Aug. 22, 2018.