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This is the opposite of correct. Toys R Us core business is profitable and throws off 200 million in profits a year.

The reason they went bankrupt is that a private equity company bought them in an LBO and the debt load became unserviceable.

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here's what I don't understand - if the equity firm took out a huge loan to buy Toys R Us, how come it's Toys R Us that's going bankrupt? Did they transfer the debt to Toys R Us? I don't understand M&A at all but that seems backwards.

If this is true, then why are they closing the stores?

Because with $5 billion in debt, even if they devoted 100% of that $200 million/year profit to paying off the debt, it'd take 25 years for them to pay it all back -- and that's assuming the debt isn't accruing any interest over all that time. Which is why the parent called the debt load unserviceable.

OK so the debt load became unserviceable and the company went bankrupt. But why doesn't the administrator keep the stores running? The creditors would get an asset worth $200 million per year which is better than nothing

That still doesn't really make sense. A bankruptcy reorganization would make more sense than a complete shutdown, if the stores themselves were really profitable.

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