As Toys ‘R’ Us heads for liquidation, a common refrain has it that the toy retailer failed to successfully reorganize in Chapter 11 because it took on too much debt. The 2005 leveraged buyout (LBO) of Toys ‘R’ Us by a group of investors led by KKR Group, Bain Capital, and Vornado Realty Trust is a particular target for blame. But this ignores the larger issue, of which the LBO and the subsequent bankruptcy are merely symptoms. In short, Toys ‘R’ Us collapsed, like many companies have, because of a failure to innovate.
Unmanageable debt and capital structures – though … Read more