Skip to Content

The Trust’s Opposition to Defendants’ Motion for Summary Judgment

Read the Opposition Brief here.

Defendants directed Toys “R” Us to file a chapter 11 bankruptcy on September 18, 2017.  They controlled the company for another six months and then announced that the Company was liquidating its U.S. business and selling off all remaining assets.  This sudden liquidation surprised employees, vendors, and the Unsecured Creditors’ Committee. 

The result was nearly $800 million in unpaid administrative claims.  That number was shocking.  It was “the largest administrative insolvency in the history of this country.” 

Administrative claimants include the employees and vendors who provide goods and services to a company after it files for bankruptcy protection.  Because the bankruptcy code gives administrative claimants priority to be paid, the amount of unpaid administrative claims at the end of the case should be (and almost always is) zero.  But the Toys “R” Us bankruptcy resulted in hundreds of millions of dollars in claims from administrative claimants, and no money to pay them.

$800 million.  Administrative losses this large cannot be explained by innocent mistake.  They cannot be explained by reasonable decisions that just didn’t happen to work out.  So how did it happen?  That question is answered by the evidence compiled by the Trust in this case.  The documents and testimony provide overwhelming evidence that those losses were the direct result of Defendants’ bad faith actions, knowing abdication of duties, fraudulent transfers, and fraudulent misrepresentations and concealments.  The misconduct began before the petition date and continued throughout the case.

Related links
Former Toys ‘R’ Us Execs, Board Accused of Fraud in Bankruptcy Case (

The creditors filing notes that defendants have called the argument that Toys “R” Us should have known restructuring was doomed, and moved immediately to liquidation to maximize assets, “Monday morning quarterbacking.”

“That is not Monday morning quarterbacking,” the creditors replied.  “Those facts were known months before the game started.  An even more apt analogy is that Defendants approved a Hail Mary pass attempt with no time on the clock, and without a quarterback who could throw the football.”

Toys ‘R’ Us Directors Face New Fraud Claims Over Bankruptcy (



Scroll to Top of Page