Toys “R” Us Sale of Propco II Assets

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Toys “R” Us Property Company II (the “Propco II Debtor”) and Giraffe Junior Holdings (collectively, the “Propco II Debtors”) filed with the U.S. Bankruptcy Court a motion for entry of an order (i) establishing bidding procedures for the sale of the Propco II assets, (ii) scheduling an auction and hearing to consider the sale, (iii) approving the form and manner of notice thereof, (iv) authorizing certain expense reimbursement provisions, (v) establishing an intercompany administrative claims bar date, (vi) scheduling hearings and deadlines with respect to the Propco II Debtors’ Disclosure Statement and Plan Confirmation, and (vii) shortening the objection periods and notice requirements related thereto.

The motion explains, “The Propco II Debtor is a single purpose entity and indirect wholly-owned subsidiary of Toys “R” Us, that owns fee simple and leasehold interests in, collectively, 123 properties located in 29 states….Additionally, the Propco II Debtors and the Stalking Horse Bidder have entered into the Stalking Horse Agreement, whereby the Stalking Horse Bidder proposes to purchase substantially all of the Assets for a credit bid of approximately $480 million (the ‘Credit Bid’), which will serve as a competitive baseline of recovery for the Propco II Debtors’ stakeholders. The proposed transaction, if approved, will generate value for the Propco II Debtors’ estates, and among other things, satisfy a significant portion of the prepetition claims against the Propco II Debtors and pave the way for confirmation of a chapter 11 plan. The Propco II Debtors now seek authority to market test the transaction contemplated by the Stalking Horse Agreement to ensure the Propco II Debtors obtain the highest or otherwise best offer or combination of offers for the Assets….If the Propco II Debtors do not receive non-binding indications of interest (excluding any overlap) on or before the Initial Bid Deadline that aggregate at least $490 million then the solicitation process will terminate, all deposits shall be refunded, no Auction shall be held, and the Credit Bid shall be deemed the highest and best bid for the Assets. If such indications of interest (excluding any overlap) equal or exceed $490 million, the Propco II Debtors may proceed to a second phase of the bidding process (the “Phase 2 Bid Process”) if they determine, after consultation with their stakeholders (including the Special Servicer) that it is reasonably likely that such non-binding indications of interest can exceed the sum of the Credit Bid and the Expense Reimbursement by at least $1,000,000; provided that the Propco II Debtors and the Special Servicer negotiate acceptable bid deadline extensions and cash collateral use with respect to any such Phase 2 Bid Process.”

The motion proposes the following general timeline: an initial bid deadline by which non-binding indications of interest must be submitted of July 2, 2018 with a sale hearing to be held on July 30, 2018.

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