Another 200 Toys R Us stores in the USA may be closed

Toys R Us in the USA is potentially about to breach a key restriction on one of the company's loans, with 200 more stores at risk of closure. CNBC reports that there are further concerns about whether key LEGO retailer Toys R Us will be able to emerge from bankruptcy protection, as the company may lack the money to keep up with one of the loans.

The storied toy retailer secured a $3.1 billion loan from a group of lenders led by J.P. Morgan Chase prior to filing for bankruptcy protection. That loan, a so-called debtor-in-possession, or "DIP," loan is given to a company to provide the money it needs to invest in the business while it is in bankruptcy.

But after a dismal holiday season, Toys R Us is now at risk of having too little cash to satisfy the terms of the loan.

There are steps that Toys R Us can take before the covenant is breached, including getting financing from other sources or restructuring the loan. If the breach does occur, it could push the retailer into liquidation. Toys R Us is working on a business plan to present to creditors that will demonstrate how the company intends to move forward, that is likely to include 200 store closures in addition to the 180 already announced.