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Toymakers object to Toys R Us liquidation plans

Toymakers, including Barbie doll-maker Mattel Inc. and Lego System A/S and at least a dozen others, filed objections March 19 and March 20 with a Richmond, Va., bankruptcy court regarding Toys R Us Inc.'s U.S. liquidation plans.

The latest toymaker filings come the same day Toys R Us is set to ask U.S. Bankruptcy Judge Keith Phillips to approve U.S. liquidation procedures, a measure that would include establishing a timeline for the auction of its 735 U.S. stores. Toys R Us owes its vendors at least $450 million, which might not ever be paid, The Wall Street Journal reported March 15.

While the largest toymakers, including Hasbro and Mattel, will likely emerge from the aftermath of the Toys R Us liquidation, analysts told S&P Global Market Intelligence that smaller companies could have trouble without the nation's last large specialty toy retailer, potentially leading to consolidation in the industry.

Mattel and rival toymaker Hasbro Inc. were among Toys R Us' largest unsecured creditors at the time of the retailer's September 2017 Chapter 11 bankruptcy protection filing. Mattel was owed $135.6 million while Hasbro, which makes G.I. Joe figurines and board games, was owed $59.1 million.

Hasbro has not filed an objection to the winding down of Toys R Us on the toy retailer's docket with the Richmond court.

Lego said in its March 20 filing that it was owed more than $30 million at the original time of filing. Hasbro, Mattel and Lego did not immediately return requests for comment. Toys R Us declined to comment beyond its filings.

Toys R Us has proposed to pay for goods received on or after March 5, according to the filings. Mattel and other vendors said Toys R Us has not clarified a number of questions within that proposal. Those questions include what happens once vendors lose visibility of their products as they are shipped overseas with a freight consolidator.

"When will [Toys R Us] deem goods 'received' such that they will pay for them: upon a vendor's delivery to a freight consolidator, upon the goods' arrival in the United States, upon the goods placement onto a [Toys R Us]-owned truck, upon the goods' delivery to [Toys R Us] distribution centers or stores, or at some other point?" Mattel said in its filing. "Mattel believes that these issues must be addressed immediately in order to prevent further harm to the vendor community."