Toys “R” Us Canada: the brand's price paid out, a trustee's remedies kept

Toys “R” Us has sold toys in Canada since 1984, and Babies “R” Us since 1996. The Canadian company's first CCAA filing came in September 2017, after its American parent went into Chapter 11; Fairfax Financial Holdings Ltd. bought the business out of the American proceedings in 2018 for approximately $300 million and sold it on August 19, 2021 to Putman Investments. The 2017 restructuring closed no stores and renegotiated no leases, according to the first affidavit of Neil Taylor, the company's chief restructuring officer, and "the post-restructuring success that the Applicant had planned for has not materialized," per the Affidavit of Neil Taylor, Feb. 2, 2026, paras. 8–11, 23.

When it filed a second time, on February 3, 2026, it had closed approximately 50 stores in the fiscal year that ended two days earlier and was down to 22, every one leased and 13 of them from Putman or a party related to its parent. It owed approximately $120 million to trade vendors, and for the ten months to November 29, 2025 it reported a net loss of approximately $170.4 million. The company attributes the decline to the long effects of the pandemic, underperforming stores it could not exit, and "macroeconomic pressures and increased labour and operational costs," per the Affidavit of Neil Taylor, Feb. 2, 2026, paras. 10–13, 18–19, 53.

Six months later the business had been sold in three pieces. On August 13, 2026, Justice J. Dietrich of the Ontario Superior Court of Justice (Commercial List) granted the order that ends the proceeding once the monitor, Alvarez & Marsal Canada Inc., serves its termination certificate; it releases the monitor and two law firms and authorizes the company to assign itself into bankruptcy, with The Fuller Landau Group Inc., or another trustee the company and monitor choose, authorized to act as trustee, per the CCAA Termination Order, Aug. 13, 2026, paras. 8, 13, 15.

Shareholder, lender, landlord

The company's parent, 2625229 Ontario Inc., now 262 Holdings Inc., is wholly owned by Douglas Putman, who was also the company's sole director. Through notes of $8 million and $5 million advanced in January 2025, bearing 20% interest as amended that June, 262 was the first-ranking secured creditor, for approximately $17 million, and companies owned by Putman or related to 262 leased the company 13 of its stores and both its distribution centres in Ancaster, Ontario. It was the DIP lender too, on a facility of up to $20 million at 13% a year plus a 3% fee on each advance: "Given the urgency of this Application and the immediate need for financing, the Applicant did not solicit competing financing proposals," Mr. Taylor swore, per the Affidavit of Neil Taylor, Feb. 2, 2026, paras. 16, 19, 24–25, 35, 56, 76, 79. The court authorized DIP borrowing of up to $13 million at the February 13 comeback and $15 million on April 1, per the Fourth Report of the Monitor, Aug. 5, 2026, paras. 1.3–1.5. 262 also licensed the company the HMV name for shop-in-shops in its stores, at $2.0 million a year plus a 10% royalty, and related suppliers, among them Everest, a distributor the Putman family founded in 1992, sold it toys, clothing and records, per the Report of the Monitor on Related Party Transactions, June 12, 2026, paras. 6.6, 7.2, 9.7.

The largest secured claim changed hands the day before the initial order. Under the 2021 share purchase agreement the company still owed Fairfax and its affiliates approximately $142 million, secured against its intellectual property. On February 2, 2026, 1001485743 Ontario Inc., "an entity owned by Putman," bought those obligations and took an absolute assignment of Fairfax's security; the purchase agreement was filed with its financial terms redacted, per the Affidavit of Neil Taylor, Feb. 2, 2026, paras. 59–63. The monitor later valued that secured IP claim, measured as the present value of royalties set at 2% of revenues, at between $20 million and $40 million, per the Third Report of the Monitor, June 12, 2026, paras. 7.3–7.4.

Three buyers, one of them the lender

The monitor sent a teaser to 90 parties, 19 of which signed non-disclosure agreements, and by the May 1 deadline had 11 letters of intent, one from 262 as DIP lender; four binding offers arrived by May 29. None, alone or combined, paid enough cash to retire both the DIP loan and the secured IP claim, so the process required the monitor to consult 262 and 1001 Ontario on the winners. The monitor supported the result, saying further marketing would not produce better deals, and reported that under both its waterfall and a liquidation analysis unsecured creditors, with approximately $150 million owed to vendors and service providers alone, were "not projected to receive any recovery on their claims," per the Third Report of the Monitor, June 12, 2026, paras. 5.3–5.14, 6.11, 6.14, 7.9.

Ad Populum, LLC bought the Toys “R” Us and Babies “R” Us intellectual property at a price sealed until closing, which the monitor's fourth report gives as $10 million in cash and a $17 million promissory note due twelve months after closing, backstopped by guarantee and security agreements. Fox Group Jumbo Canada Inc. paid $1.3 million for the Vaughan Mills lease. Most of the rest went to 262, through a nominee, for a credit bid of the DIP debt, approximately $10.5 million at closing, plus assumed liabilities and $1.5 million paid to the monitor for the cost of finishing the case. The buyer offered jobs to approximately 130 employees and substantially all accepted, per the Fourth Report of the Monitor, Aug. 5, 2026, paras. 1.6, 4.2, 4.6, 4.11–4.13, 4.17.

The monitor had set out the limits of that last sale in June. Ad Populum's licence back to the stores runs to January 15, 2027, so "the 262 Transaction is not a traditional 'going-concern' transaction as the Company will not be able to continue to operate under the Toys 'R' Us and Babies 'R' Us banners after January 15, 2027"; 262 was weighing a licence from Ad Populum, another toy brand, or winding the stores down, per the Third Report of the Monitor, June 12, 2026, paras. 6.1, 6.6.

The monitor's review

Allied World Specialty Insurance Company, a trade credit insurer for many of the company's merchandise suppliers, came to the comeback hearing saying it had already paid $50 million in claims, and asked that the monitor be authorized to look for transfers below market value and payments that preferred related parties, per the Aide Memoire of Allied World Specialty Insurance Company, Feb. 13, 2026, paras. 1, 4. The amended and restated initial order directed a review of every non-arm's-length transaction of the previous year. The monitor's report, filed June 12, counted approximately $37.6 million paid to related parties in that year and $41.4 million owed to them at filing, and found that most of it did not appear voidable: management fees on a cost-plus formula, related-party goods earning average margins of 31% against 35% on third-party goods, and rents that CBRE, retained by the monitor, mostly placed within a plausible market range, per the Report of the Monitor on Related Party Transactions, June 12, 2026, paras. 2.1, 5.6, 6.9, 7.5, 8.11.

The exceptions began with January 2026, when the company paid approximately $2.3 million to related parties and approximately $300,000 to all third-party merchandise suppliers combined. The $800,000 of that paid to Rose, a supplier half-owned by 262, bought no goods in the period (the company said Rose agreed to give future credit for it), and the monitor said the payments "could be considered preferences"; so could a catch-up payment of approximately $1.0 million in rent arrears to a related landlord. The company told the monitor that its credit insurance with Allied World had expired on December 31, 2025 without renewal, and that most third-party vendors would then not supply it even cash on delivery, per the Report of the Monitor on Related Party Transactions, June 12, 2026, paras. 7.4 n. 5, 7.9–7.10, 7.14, 8.12.