Customers still holding onto Toys ‘R’ Us Canada physical and digital gift cards are running out of time to use them after the struggling retailer announced Tuesday that it filed for creditor protection in Ontario.
Toys ‘R’ Us has been closing dozens of stores and laying off staff in the U.S. and Canada since 2018 as fierce competition and shifting consumer trends take a toll on the business, with only a few stores remaining open in Canada.
It isn’t clear yet if those stores will stay open for long, and the clock is ticking down to use up old gift cards, according to court documents.
“Customers of the Applicant [Toys ‘R’ Us] could previously purchase gift cards (‘Gift Cards’) in store or online, as well as through third parties, to be redeemed for merchandise. Recently, the Applicant discontinued the sale of new Gift Cards,” the court filings say.
“The Applicant currently anticipates honouring its previously-issued Gift Cards for 14 days after filing.”
The court filings were dated Feb. 2, which means those gift cards will only be redeemable until Feb. 16.
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It isn’t clear if gift cards will be honoured after that date or what customers should expect.
Global News has sent a request for information to both Toys ‘R’ Us and the consulting firm overseeing the company’s proceedings, Alvarez and Marsal Canada Inc., about what customers can do if they have previously issued gift cards and do not redeem them by Feb. 16.
A response was not received by publication time.
The government of Canada defines gift cards as “a prepaid card that you use to pay for purchases,” and adds: “usually gift cards … don’t expire.” It also advises Canadians to make sure to read the terms and conditions of any gift card.
It appears that Toys ‘R’ Us gift cards will also need to be redeemed in-store, as the online store was unavailable as of publication.
“Our web store is unavailable,” reads a website message on the Toys R Us website.
“We have filed for protection under the Companies’ Creditors Arrangement Act (CCAA). Please visit us in-store for all your needs. We appreciate your continued support.”
The message on the website adds: “Please check back for updates.”
The Companies’ Creditors Arrangement Act is a federal law that helps some companies restructure their debts and operations to avoid bankruptcy.
Toys ‘R’ Us is also the banner name behind Babies ‘R’ Us and the HMV Shop, and the same message was found on the homepages of each online store.
A Global News attempt to purchase a new gift card online from Toys ‘R’ Us was unsuccessful, and a message reads that a gift card “never expires.”
Toys ‘R’ Us filed for creditor protection after a retail landlord, RioCan Holdings Inc., terminated its lease and said the retailer failed to pay rent.
According to the court filings, 22 Toys ‘R’ Us stores remain open in Canada, but their future is unknown as financial struggles continue to mount.
“The Applicant has 22 leased store locations across Canada. Due to the Applicant’s recent financial challenges, it currently owes significant arrears to its landlords,” the court filings say.
“Without the protection of the CCAA, landlords may exercise self-help remedies, including rights of distraint or termination of the Applicant’s leases.”
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