KE 53178909

Edward O. Sassower, P.C. James H.M. Sprayregen, P.C.

Joshua A. Sussberg, P.C. (admitted pro hac vice) Anup Sathy, P.C.

KIRKLAND & ELLIS LLP Chad J. Husnick, P.C. (admitted pro hac vice)

KIRKLAND & ELLIS INTERNATIONAL LLP Emily E. Geier (admitted pro hac vice)

601 Lexington Avenue KIRKLAND & ELLIS LLP

New York, New York 10022 KIRKLAND & ELLIS INTERNATIONAL LLP

Telephone: (212) 446-4800 300 North LaSalle

Facsimile: (212) 446-4900 Chicago, Illinois 60654

Telephone: (312) 862-2000

-and- Facsimile: (312) 862-2200

Michael A. Condyles (VA 27807)

Peter J. Barrett (VA 46179)

Jeremy S. Williams (VA 77469)

KUTAK ROCK LLP

901 East Byrd Street, Suite 1000

Richmond, Virginia 23219-4071

Telephone: (804) 644-1700

Facsimile: (804) 783-6192

Co-Counsel to the Debtors and Debtors in Possession

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

)

In re: ) Chapter 11

)

TOYS “R” US, INC., et al.,

1

) Case No. 17-34665 (KLP)

)

Debtors. )

) (Jointly Administered)

DEBTORS’ MOTION FOR ENTRY OF AN 

ORDER (I) AUTHORIZING THE DEBTORS TO PROVIDE 

TRANSITION SERVICES, (II) AUTHORIZING THE DEBTORS TO 

TAKE ANY CORPORATE ACTION NECESSARY TO CONSUMMATE THE

CENTRAL EUROPEAN SALE, (III) AUTHORIZING CERTAIN DEBTORS TO

ENTER INTO RELATED AGREEMENTS, AND (IV) GRANTING RELATED RELIEF

The above-captioned debtors and debtors in possession (collectively, the “Debtors”)2

respectfully state as follows in support of this motion (this “Motion”):

 

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification 

number, are set forth in the Order (I) Directing Joint Administration of Chapter 11 Cases and (II) Granting 

Related Relief [Docket No. 78]. The location of the Debtors’ service address is One Geoffrey Way, Wayne, 

New Jersey 07470.

2 A detailed description of the Debtors and their business, and the facts and circumstances supporting the Debtors’ 

chapter 11 cases, are set forth in greater detail in (i) the Declaration of David A. Brandon, Chief Executive Officer 

of Toys “R” Us, Inc., in Support of Chapter 11 Petitions and First Day Motions (the “Brandon Declaration”) and 

(ii) the Declaration of Michael J. Short, Chief Financial Officer of Toys “R” Us, Inc., in Support of First Day 

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Relief Requested

1. By this Motion, the Debtors seek entry of an order, substantially in the form 

attached hereto as Exhibit A (the “Order”): (a) authorizing the Debtors to take any corporate 

action necessary to consummate the sale (the “Central European Sale”) of non-Debtor TRU (UK) 

H8 Limited’s (the “Seller”) equity interest in Toys “R” US-Handelsgesellschaft (“Toys Austria”), 

Toys “R” Us GmbH (“Toys Germany”), and Toys “R” Us AG (“Toys Switzerland,” and together 

with Toys Austria and Toys Germany, the “Central European Business”) to Smyths Toys EU HQ 

Limited (the “Purchaser”) contemplated by that certain Sale and Purchase Agreement entered into 

by and between the Seller and Purchaser on April 21, 2018 (the “Sale and Purchase Agreement”),3

including: (i) authorizing the applicable Debtors, as necessary, including Toys Inc. and the Tru 

Taj Debtors to provide any instructions and consents necessary to effectuate and implement the 

Sale and Purchase Agreement;4(ii) authorizing Toys “R” Us—Delaware, Inc. (“Toys Delaware”) 

to enter into a transition services agreement in connection with the Sale and Purchase Agreement 

(the “Transition Services Agreement”) and an accompanying support agreement (the “Transition 

Services Support Agreement”);5(iii) confirming the Release Deeds substantially in the form 

 

Motions (the “Short Declaration” and together with the Brandon Declaration, the “First Day Declarations”), filed 

contemporaneously with the Debtors’ voluntary petitions for relief filed under chapter 11 of title 11 of the United 

States Code (the “Bankruptcy Code”), on September 18, 2017 (the “Petition Date”). Capitalized terms used but 

not defined herein shall have the meaning set forth in the Sale and Purchase Agreement, the First Day 

Declarations, or the Debtors’ Motion for Entry of Interim and Final Orders (I) Authorizing the TRU TAJ Debtors 

to Obtain Postpetition Financing, (II) Authorizing the TRU TAJ Debtors to Use Cash Collateral, (III) Granting 

Liens and Providing Superpriority Administrative Expense Status, (IV) Granting Adequate Protection to the 

Prepetition Lenders, (V) Modifying the Automatic Stay, (VI) Scheduling a Final Hearing, and (VII) Granting 

Related Relief [Docket No. 32], as applicable.

3 A copy of the Sale and Purchase Agreement is attached to the Order as Exhibit 1. 

4 The forms of each agreement contemplated by this Motion as attached to the Sale and Purchase Agreement were 

negotiated between Seller and Purchaser, and remain subject to negotiation between the Debtors and 

interested parties. All parties intend to file final forms of agreements prior to the final hearing on the Motion.

5 The Debtors filed a motion contemporaneously herewith seeking authority for Toys Delaware to provide the 

transition services under the Transition Services Agreement contemplated by this Motion (the “Transition 

Services Motion”). 

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attached to the Sale and Purchase Agreement as Annex 2.8.2; and (iv) authorizing Toys “R” Us, 

Inc. (“Toys Inc.”) and Toys “R” Us Europe, LLC (“Toys Europe”) to enter into the Waiver and 

Release of Contingent Interests, the current form of which is attached to the Sale and Purchase 

Agreement as Annex 2.4.3 (the “Waiver and Release Agreement”); and (b) granting related relief. 

In support of this Motion, the Debtors submit the Declaration of Christian Tempke in Support of 

the Debtors’ Motion for Entry of an Order (I) Authorizing the Debtors to Provide Transition 

Services, (II) Authoring the Debtors to Take Any Corporate Action Necessary to Consummate the 

Central European Sale, (III) Authorizing Certain Debtors to Enter Into Related Agreements, and 

(IV) Granting Related Relief attached hereto as Exhibit B (the “Tempke Declaration”).

Jurisdiction and Venue

2. The United States Bankruptcy Court for the Eastern District of Virginia 

(the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the 

Standing Order of Reference from the United States District Court for the Eastern District of 

Virginia, dated July 10, 1984. The Debtors confirm their consent, pursuant to rule 7008 of the 

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), to the entry of a final order by 

the Court in connection with this Motion to the extent that it is later determined that the Court, 

absent consent of the parties, cannot enter final orders or judgments in connection herewith 

consistent with Article III of the United States Constitution.

3. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

4. The bases for the relief requested herein are sections 105 and 363(b) of 

the Bankruptcy Code, Bankruptcy Rules 2002, 6004, 6006, and rule 9013-1 of the Local Rules of 

the United States Bankruptcy Court for the Eastern District of Virginia (the “Local 

Bankruptcy Rules”).

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Background

I. The Central European Sale.

5. In connection with the wind-down of the Debtors’ U.S. operations (the “U.S. 

Wind-Down”), the Debtors initiated efforts to monetize their viable operations throughout Canada, 

Europe, and Asia. Over the course of the last several months, the Debtors have undertaken 

substantial efforts to realize value-maximizing sales of these businesses. On April 25, 2018, the 

Court approved a sale of the Debtors’ Canadian operations for a base purchase price of CAD 

$300 million [Docket No. 2852]. And as publicly reported, the Debtors continue to explore a sale 

of their Asian-Pacific operations with multiple potential purchasers continuing to 

conduct diligence. 

6. The Debtors seek through this Motion approval of certain actions and agreements 

relating to the sale of their Central European Business. More specifically, the Seller seeks to sell 

its operations in Germany, Austria, and Switzerland to the Purchaser, an affiliate of Smyths Toys 

Superstores (“Smyths Toys”), which currently operates 110 toy stores and online shops in Ireland 

and Great Britain. If consummated, the Central European Sale will provide for a baseline purchase 

price of EUR 64.4 million (approximately $79.3 million) and could yield up to approximately 

EUR 79 million (approximately $97.7 million), subject to certain adjustments and escrows and 

meeting certain conditions.6 The sale of the Central European Business is the product of extensive 

marketing efforts, as well as extensive, arm’s-length negotiations (described in detail in 

Section III below). 

7. Importantly, the Central European Business is being sold on a going-concern basis. 

Thus, employees, customers, and vendors will all benefit from the proposed transaction. 

 

6 The USD figures are calculated using the forex rate as of the Sale and Purchase Agreement signing date, 

April 20, 2018.

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Additionally, as the sale is structured as a “stock deal,” the Purchaser is assuming all liabilities, 

including pension liabilities (other than those liabilities expressly waived as described herein and 

set forth in the Sale and Purchase Agreement).

8. Moreover, intercompany claims of any Debtors or non-Debtor affiliate, if any, that 

exist against Toys Germany, Toys Austria, and/or Toys Switzerland will be waived as to the 

Purchaser, and such claims will be subject to an express reservation of rights for the Debtor and 

non-Debtor affiliates to prosecute such claims against the proceeds of the Central European Sale 

in the same priority as such claims would have been afforded if allowed on the date of the 

sale. While the proceeds of the sale will be used in the first instance to pay down the higher interest 

rate obligations under the Taj DIP notes pursuant to the terms of the Taj DIP indentures and the 

TAJ DIP orders (subject to obtaining applicable waivers), any reservations of rights on account of 

the reserved intercompany claims will be trued up in subsequent distributions from the Taj 

Debtors’ estates whether under a chapter 11 plan or otherwise (but in all cases subject to a further 

order of the Court or consent of the applicable parties).7

II. Effect of Central European Sale on Intellectual Property.

9. Under the terms of existing license agreements between Debtor Geoffrey LLC 

(“Geoffrey”) and Toys Germany, Toys Austria, and Toys Switzerland, respectively (the 

“IP License Agreements”), the Central European Business currently uses various trademarks, 

service marks, trade names, and other intellectual property owned by Geoffrey. This arrangement 

differs materially from the Toys Canada business, which owns its own regional intellectual 

property. Pursuant to the IP License Agreements, in the event there is a change of control in 

 

7 Pursuant to Section 2.5 and 2.6 of the Sale and Purchase Agreement, the Central European Businesses shall pay 

the outstanding payables that they have vis-à-vis the Seller and its Affiliates (as defined in the Sale and Purchase 

Agreement). However, the Debtors and their non-debtor affiliates make the foregoing reservation of rights out 

of an abundance of caution (i) in case such amounts are not made as contemplated and (ii) to preserve any other 

intercompany claims such parties may have against Toys Germany, Toys Austria, and/or Toys Switzerland.

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ownership, Geoffrey and the Central European Business have an obligation to engage in 

arm’s-length negotiations to enter into a potential amendment to the IP License Agreements. 

During the course of those negotiations, the IP License Agreements will remain in full force and 

effect. Absent an agreement, Geoffrey maintains the ability to terminate the IP License 

Agreements. 

10. Geoffrey, the Seller, and the Purchaser were engaged in conversations regarding 

the IP License Agreement in early April before focusing on finalizing the Sale and Purchase 

Agreement, and have reengaged in these conversations in recent days. On April 30, 2018, 

Geoffrey sent a letter to the Central European Business seeking to resume these negotiations, and 

intends to continue seeking a commercially reasonable agreement prior to the closing date of the 

Sale and Purchase Agreement. To the extent necessary, Geoffrey will seek authority to enter any 

new or modified license agreements pursuant to separate motion. If the parties are unable to reach 

an agreement on an amendment or new license, the IP License Agreements may be terminated by 

Geoffrey. If they are terminated, the Central European Business under the Purchaser will transition 

to an alternative brand name and sell or otherwise dispose of private label inventory.

III. The Marketing Process.

11. The Debtors, with the assistance of their investment banker Lazard Frères & Co. 

LLC (“Lazard”), ran a fair and robust marketing process for their Central European Business. In 

late January 2018,8 Lazard began reaching out to potential investors to explore a sale of all or part 

of the Debtors’ European businesses. Over the course of the months that followed, Lazard 

contacted over 90 potential investors and executed non-disclosure agreements (“NDAs”) with 

approximately 25 parties. Lazard provided additional details to these parties, including a 

 

8 The Debtors initiated the sale processes in response to the performance of European operations and in order to 

understand the market value of their assets in preparation for a plan of reorganization in these chapter 11 cases.

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confidential management presentation and access to other confidential diligence materials. In 

February, the Debtors received letters of intent (“LOIs”) from five different parties for all or parts 

of the European businesses, of which two LOIs were specifically for the Central 

European Business. 

12. After evaluating the non-binding LOIs, the Debtors pursued a second-round 

process for certain of their European businesses. The Debtors arranged meetings between local 

management and potential investors and their advisors, and had numerous follow-up discussions 

and diligence sessions over the following weeks. The Debtors requested binding second-round 

bids by early April and received one binding offer for the Central European Business from the 

Purchaser. Over the course of the following two weeks, the Debtors and certain of their non-debtor 

affiliates (as defined herein), and their respective advisors, engaged with the Purchaser in 

extensive, arm’s-length negotiations to finalize the Purchaser’s offer. The Debtors and the 

Non-Debtor Affiliates have determined that the Central European Sale to the Purchaser is the best 

or otherwise highest proposal under the circumstances. 

IV. Approval of Related Transactions. 

13. Neither the Seller, Toys Germany, Toys Austria, nor Toys Switzerland (such 

parties, collectively, the “Non-Debtor Affiliates”) are Debtors. However, (a) they are 

all wholly-owned indirect subsidiaries of the Debtors and (b) the Seller and Toys Germany are 

guarantors on the Prepetition Taj Senior Notes and International DIP Facility (together with the 

Europe Credit Agreement, the “Secured Taj Obligations,” and the lenders thereunder, the 

“Taj Secured Lenders”). Subject to reaching a mutually agreeable Waiver and Release 

Agreement, the Ad Hoc Group of Taj Noteholders9support the Central European Sale and have 

 

9 The “Ad Hoc Group of Taj Noteholders” refers to certain beneficial holders of Notes represented by Paul, Weiss 

Rifkind, Wharton & Garrison LLP, as described in the Third Amended Verified Statement of the Ad Hoc Group 

of Taj Noteholders Pursuant to Bankruptcy Rule 2019, [Docket No. 2056], as may be updated from time to time.

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agreed to release their liens and claims on the Central European Business (the “Release Deeds”). 

Additionally, certain Debtors are party to one or more of the agreements attached to the Sale and 

Purchase Agreement, and the consent or direction of certain Debtors and non-Debtor affiliates is 

required to effectuate the Sale and Purchase Agreement and related agreements. 

14. Below is a summary of the various agreements contemplated by the Sale and 

Purchase Agreement:10

 Transition Services Agreement and Transition Services Support Agreement. The 

Transition Services Agreement, a current non-binding draft of which is attached to the 

Order as Exhibit 2, provides for certain information technology services to be provided 

by Toys Delaware through April 30, 2019. The Transition Services Support 

Agreement, a draft of which will be attached to the Order as Exhibit 3, provides for 

additional funding to Toys Delaware in the event that the costs to provide the Transition 

Services exceed the fees provided for in the Transition Services Agreement, thus 

preventing additional costs to Toys Delaware. Because the Purchaser operates toy 

stores, it may have different needs than the purchaser of Toys Canada or the Toys 

Asian-Pacific businesses, but the Debtors believe that the Transition Services 

Agreement for the Central European Business will be materially consistent with the 

services the Debtors will provide to the purchasers of their other international 

operations. Further, approval of the Transition Services Motion and Toys Delaware’s 

entry into the Transition Services Agreement is a necessary component of the overall 

transaction with Purchaser, and entry into the Transition Services Support Agreement 

is a condition of Toys Delaware agreeing to provide such services. Accordingly, by this 

Motion, the Debtors seek approval of entry into the Transition Services Agreement and 

the Transition Services Support Agreement as relating to the Central European 

Business, subject to Toys Delaware obtaining authorization to provide such services by 

the Transition Services Motion. 

 Release Deeds. The Release Deeds, substantially in the form attached to the Sale and 

Purchase Agreement as Annex 2.8.2, confirm the release by each of Wilmington 

Savings Fund Society, FSB as First-Priority trustee and First-Priority Collateral Trustee 

and Wilmington Trust N.A. as Second-Priority Trustee and Second-Priority Collateral 

Trustee of: (i) certain Share Pledges, pursuant to which the shares of the Central 

European Business were pledged as collateral to secure the Secured Taj Obligations 

and (ii) all security interests relating to the Taj Indenture and Taj DIP Indenture. 

The Taj Secured Lenders support the Release Deeds and believe the consideration for, 

and immediate use of proceeds from, the Central European Business to repay the 

obligations under the DIP Orders justifies such releases.

 

10 The forms of each agreement contemplated by this Motion as attached to the Sale and Purchase Agreement were 

negotiated between Seller and Purchaser, and remain subject to negotiation between the Debtors and 

interested parties. All parties intend to file final forms of agreements prior to the final hearing on the Motion. 

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 Waiver and Release Agreement. The Waiver and Release Agreement, substantially 

in the form attached to the Order as Exhibit 4, provides the Purchaser a waiver of 

certain contingent claims. Specifically, Toys Europe and Toys Inc. (together, the 

“Debtor Parties”) are both lenders under certain loan agreements with Toys Germany 

(the “Shareholder Loans”) and party to a waiver of the Shareholder Loans, which 

waiver requires repayment under the Shareholder Loans in certain circumstances (all 

such obligations, the “Contingent Interests” defined in the Sale and Purchase 

Agreement). The validity, status, and value of the Contingent Interests are all in 

dispute. To facilitate the Central European Sale, by the Waiver and Release 

Agreement, the Debtor Parties will agree to waive the right to payment of the 

Contingent Interests from the Purchaser and certain related parties but retain all rights 

and claims by and between the Debtor Parties, as set forth in the Waiver and Release 

Agreement. 

 Intercompany Claims. As discussed above, the Sale and Purchase Agreement 

provides a release for the Purchaser related to claims held by certain Debtor and 

non-Debtor affiliates. Intercompany claims of any Debtors or non-Debtor affiliate, if 

any, that exist against Toys Germany, Toys Austria, and/or Toys Switzerland will be 

waived as to the Purchaser, and such claims will be subject to an express reservation 

of rights for the Debtor and non-Debtor affiliates to prosecute such claims against the 

proceeds of the Central European Sale in the same priority as such claims would have 

been afforded if allowed on the date of the sale. While the proceeds of the sale will be 

used in the first instance to pay down the higher interest rate obligations under the Taj 

DIP notes pursuant to the terms of the Taj DIP indentures and the TAJ DIP orders 

(subject to obtaining applicable waivers), any reservations of rights on account of the 

reserved intercompany claims will be trued up in subsequent distributions from the Taj 

Debtors’ estates whether under a chapter 11 plan or otherwise (but in all cases subject 

to a further order of the Court or consent of the applicable parties).

15. Additionally, out of an abundance of caution, the Debtors seek authorization from 

the Court to take any corporate action, including but not limited to granting consents or giving 

directions to affiliates, necessary to implement the Central European Sale. As entry of the 

proposed Order is a condition to the Central European Sale, failure to obtain the relief requested 

herein may jeopardize the Central European Sale.

16. Accordingly, the Debtors request that the Court enter the Order and approve the 

relief requested by this Motion.

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V. Material Terms of the Central European Sale.

17. The following chart summarizes the key terms and conditions of the Central 

European Sale.

Provision Summary Description

Seller TRU (UK) H8 Limited

Purchaser Smyths Toys EU HQ Limited. The purchaser is not an affiliate or 

insider of the Debtors.

Assets Seller’s equity interest in Toys Germany, Toys Austria, and Toys 

Switzerland.

Purchase Price EUR 64.4 million baseline purchase price less potential lockbox leakage 

adjustments and escrows and up to an estimated EUR 79.0 million 

subject to certain positive adjustments and meeting certain conditions.

Austrian Merger 

Clearance

The sale of Toys Austria is subject to Austrian merger review 

regulations, and as such, may not close until a later time. Nonetheless, 

the Debtors believe it is appropriate to seek and obtain all relief by this 

Motion. However, if the Debtors do not obtain approval to authorize the 

sale of Toys Austria at this time, the sale of the other Central European 

Business should not be impacted.

Release of Certain 

Intercompany 

Claims

As discussed herein, sections 2.5 and 2.6 of the Sale and Purchase 

Agreement release certain intercompany transactions between the 

Seller, and its Affiliates (as defined in the Sale and Purchase 

Agreement), and the Central European Business. 

The Order Provides: “Notwithstanding anything in the Sale and 

Purchase Agreement to the contrary, the Debtors agree that any 

intercompany claims that any Debtor or non-Debtor affiliate held 

against Toys Germany, Toys Austria, and/or Toys Switzerland as of the 

date of closing the Sale and Purchase Agreement will be released as to 

the Purchaser only, and each Debtor or non-Debtor affiliate with valid 

intercompany claims against the entities sold to the Purchaser as of such 

date shall be allowed to assert such intercompany claims against the 

proceeds of the Central European Sale in the same priority as such 

intercompany claims had against the applicable entities sold to the 

Purchaser; provided that the proceeds of the Central European Sale may 

be used to repurchase the Taj DIP Notes (subject to obtaining applicable 

waivers) and any such intercompany claims shall be trued up from 

distributions from the Taj Debtors estates, whether under a chapter 11 

plan or otherwise (but in all cases subject to a further order of the Court

or consent of the applicable parties). All parties reserve all rights and 

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defenses related to any such intercompany claims, other than that such 

claims have been released pursuant to this Order.”

Key Conditions The Central European Sale is conditioned on the execution of the Waiver 

and Release Agreement, the Release Deeds, and the Transition 

Services Agreement. 

Court Approvals The Central European Sale is also conditioned upon entry of orders 

approving the Waiver and Release Agreement, Release Deeds, 

approving the Transition Services Agreement, and authorizing the 

Debtors to take any corporate action necessary to consummate the 

Central European Sale.

Given that the Seller and the Central European Business are all nonDebtors, the Debtors submit that Court approval of the Central 

European Sale itself is not required. If the Court does require the 

Debtors to subject the Central European Sale to an additional, Courtmonitored marketing process, the Debtors would be required to seek 

approval of bidding protections acceptable to the Purchaser.

Basis for Relief

I. Entry into the Transition Services Agreement, Transition Services Support 

Agreement, Release Deeds, and Waiver and Release Agreement and Take Any Other 

Corporate Action Necessary to Consummate the Central European Sale Is a 

Reasonable Exercise of the Debtors’ Business Judgment. 

18. Section 363(b)(1) of the Bankruptcy Code authorizes a bankruptcy court, after 

notice and a hearing, to authorize a debtor to “use, sell, or lease, other than in the ordinary course 

of business, property of the estate.” 11 U.S.C. § 363(b)(1). To approve a use, sale or lease of 

property other than in the ordinary course of business, the court must find “some sound business 

purpose” that satisfies the business judgment test. See In re W.A. Mallory Co., 214 B.R. 834, 836 

(Bankr. E.D. Va. 1997); see also In re Glover, No. 09-74787 at *4 (SCS) (Bankr. E.D. Va. 

Mar. 31, 2010) (“The standard in this Circuit is whether the debtor in possession has exercised 

sound business judgment.”) (citing Lubrizol Enters., Inc. v. Richmond Metal Finishers, Inc., 756 

F.2d 1043, 1046 (4th Cir. 1985)). Courts generally show great deference to a debtor’s decisions 

when applying the business judgment standard. See In re Alpha Nat. Res., Inc., 546 B.R. 348, 356 

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(Bankr. E.D. Va. 2016) (“Courts apply the deferential business judgment test when analyzing 

transactions under § 363(b)(1).”). Deference to a debtor’s business judgment is inappropriate only 

if such business judgment is “so manifestly unreasonable that it could not be based on sound 

business judgment, but only on bad faith, or whim or caprice.” Lubrizol at 1047.

19. Once the Debtors articulate a valid business justification, “[t]he business judgment 

rule is a presumption that in making the business decision the directors of a corporation acted on 

an informed basis, in good faith, and in the honest belief that the action was in the best interests of 

the company.” In re S.N.A. Nut Co., 186 B.R. 98, 102 (Bankr. N.D. Ill. 1995) (citations omitted); 

In re Filene’s Basement, LLC, 11-13511 (KJC), 2014 WL 1713416, at *12 (Bankr. D. Del. Apr. 

29, 2014) (“If a valid business justification exists, then a strong presumption follows that the 

agreement at issue was negotiated in good faith and is in the best interests of the estate”) (citations 

omitted); Integrated Res. 147 B.R. at 656; In re Johns-Manville Corp., 60 B.R. 612, 615–16 

(Bankr. S.D.N.Y. 1986) (“a presumption of reasonableness attaches to a Debtor’s management 

decisions.”).

20. The Debtors have determined in their business judgment that entry into the Sale 

and Purchase Agreements is in the best interest of their estates. Significantly, the Ad Hoc Group 

of Taj Noteholders have agreed to release, pursuant of the terms of the Release Deeds, the Central 

European Business from their collateral to effectuate the transaction. The Debtors, together with 

the Ad Hoc Group of Taj Noteholders, explored the possibility of operating Central Europe as a 

standalone. The parties all believe, however, that the Purchase and Sale Agreement represents the 

highest and best recovery for stakeholders under the circumstances. Accordingly, the Debtors 

believe that entry into the Transition Services Agreement, Transition Services Support Agreement, 

Release Deeds, Waiver and Release Agreement, and subject to the reservation of rights contained 

in the proposed Order, the release of certain intercompany claims to effectuate the Sale and 

Purchase Agreement should be approved. 

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21. The Debtors submit that Court approval is not required for any non-debtor 

subsidiary to sell its interest in other non-debtor subsidiaries because such assets do not constitute 

property of a debtor’s estate within the meaning of section 541(a) of the Bankruptcy Code. 

Nonetheless, out of an abundance of caution, the Debtors request that this Court also authorize the 

Debtors to take any other corporate action necessary to consummate the Central European Sale. In 

doing so, the Debtors submit that the Court may grant such relief pursuant to section 105(a) using 

the same standards under section 363(b) of the Bankruptcy Code set forth above. 

22. Here, the Debtors amply satisfy the applicable standards. Entry into the Transition 

Services Agreement, Transition Services Support Agreement, Release Deeds, Waiver and Release 

Agreement, and subject to the reservation of rights contained in the proposed Order, the release of 

certain intercompany claims and taking any other corporate actions to approve and facilitate the 

Central European Sale, is a sound exercise of the Debtors’ business judgment, as such actions are 

part and parcel of an overall transaction that will bring significant value to the Debtors’ estates. 

23. As described above, the Central European Sale is the result of a robust and fair 

marketing process, and extensive, arm’s-length negotiations. By vetting the Central European Sale 

through the market, the Debtors have obtained the highest or otherwise best offer for the Central 

European Business under the circumstances. See In re Wintz Cos., 219 F.3d 807, 813 (8th Cir. 

2000) (holding that an auction procedure for the disposition of the debtor’s property can be 

structured to “maximize the value of estate property”). Moreover, given the U.S. Wind-Down, 

any delay in monetizing the Central European Business may hamper any efforts to do so in the 

future. Thus, for all the reasons stated herein, the Debtors request that the Court grant the Motion 

as a proper exercise of the Debtors’ business judgment.

24. Courts have authorized substantially similar relief. See, e.g., In re Abeinsa Holding 

Inc., No. 16-10790 (KJC), (Bankr. D. Del. May 3, 2016) [Docket No. 162] (authorizing debtor to 

sell substantially all assets of non-debtor subsidiaries); In re Haggen Holdings, LLC, No. 15-11874 

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(KG) (Bankr. D. Del. Apr. 26, 2016) [Docket No. 1832] (authorizing debtor to monetize assets of 

non-debtor affiliates); In re Variant Holding Company, LLC, No. 14-12021 (BLS) (Bankr. D. Del. 

June 5, 2015) [Docket No. 381] (authorizing debtor to sell assets of non-debtor subsidiaries 

pursuant to purchase agreement); In re Arcapita Bank B.S.C.(c), No. 12-11076 (SHL) (Bankr. 

S.D.N.Y. Dec. 18, 2012) [Docket No. 726] (authorizing debtor to grant consents and approvals in 

connection with sale by non-debtor subsidiary pursuant to purchase agreement).

II. Relief Under Bankruptcy Rules 6004(h) and 6006(d) Is Appropriate.

25. Bankruptcy Rule 6004(h) provides that an “order authorizing the use, sale, or lease 

of property . . . is stayed until the expiration of fourteen days after the entry of the order, unless 

the court orders otherwise.” Fed. R. Bankr. P. 6004(h). Additionally, Bankruptcy Rule 6006(d) 

provides that an “order authorizing the trustee to assign an executory contract or unexpired 

lease . . . is stayed until the expiration of fourteen days after the entry of the order, unless the court 

orders otherwise.” Fed. R. Bankr. P. 6006(d). Although the Central European Business is not 

property of the Debtors’ estates, to the extent Bankruptcy Rules 6004(h) and 6006(d) apply, the 

Debtors request that the fourteen-day stays under Bankruptcy Rules 6004(h) and 6006(d) are 

waived and the Order be effective immediately upon its entry.

26. The purpose of Bankruptcy Rules 6004(h) and 6006(d) is to provide sufficient time 

for an objecting party to appeal before an order can be implemented. See Advisory Committee 

Notes to Fed. R. Bankr. P. 6004(h) and 6006(d). Although Bankruptcy Rules 6004(h) and 6006(d) 

and the Advisory Committee Notes are silent as to when a court should “order otherwise” and 

eliminate or reduce the fourteen-day stay period, the leading treatise on bankruptcy suggests that 

the fourteen-day stay should be eliminated to allow a sale or other transaction to close immediately 

“where there has been no objection to procedure.” 10 Collier on Bankr. ¶ 6004.10 (15th rev. ed. 

2006). Furthermore, if an objection is filed and overruled, and the objecting party informs the 

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15

court of its intent to appeal, the stay may be reduced to the amount of time actually necessary to 

file such appeal. Id. 

27. To maximize the value received for the Central European Business, the Debtors 

seek to close the Central European Sales as soon as possible. Accordingly, the Debtors hereby 

request that the Court waive the 14-day stay period under Bankruptcy Rules 6004(h) and 6006(d).

Waiver of Memorandum of Law

28. The Debtors respectfully request that this Court treat this Motion as a written 

memorandum of law or waive any requirement that this Motion be accompanied by a written 

memorandum of law as described in Local Bankruptcy Rule 9013-1(b).

Reservation of Rights

29. Nothing contained herein is intended or shall be construed as: (a) an admission as 

to the amount of, basis for, or validity of any claim against the Debtors under the Bankruptcy Code, 

any foreign bankruptcy or insolvency law, including the CCAA, or other applicable 

non-bankruptcy law; (b) a waiver of the Debtors’ or any other party in interest’s right to dispute 

any claim, (c) a promise or requirement to pay any particular claim; (d) an implication or admission 

that any particular claim is of a type specified or defined in this Motion; (e) a request or 

authorization to assume, adopt, or reject any agreement, contract, or lease pursuant to section 365 

of the Bankruptcy Code or pursuant to the CCAA; (f) an admission as to the validity, priority, 

enforceability, or perfection of any lien on, security interest in, or other encumbrance on property 

of the Debtors’ estates; or (g) a waiver of any claims or causes of action which may exist against 

any entity under the Bankruptcy Code, the CCAA, or any other applicable law.

Notice

30. The Debtors will provide notice of this Motion via first class mail and email (where 

available) to: (a) the Office of the United States Trustee for the Eastern District of Virginia, Attn: 

Robert B. Van Arsdale and Lynn A. Kohen; (b) counsel to the committee of unsecured creditors; 

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16

(c) DIP ABL Agent and the advisors and counsel thereto; (d) DIP Taj Term Loan Agent and the 

advisors and counsel thereto; (e) DIP Delaware Term Loan Agent and the advisors and counsel 

thereto; (f) the indenture trustee for the TRU Taj 12.00% Senior Notes and the advisors and 

counsel thereto; (g) the administrative agent for the prepetition Secured Revolving Credit Facility

and the advisors and counsel thereto; (h) the administrative agent for the prepetition Secured Term 

Loan B Facility and the advisors and counsel thereto; (i) the prepetition administrative agent for 

the Propco I Unsecured Term Loan Facility and the advisors and counsel thereto; (j) the agent for 

the Propco II Mortgage Loan and the advisors and counsel thereto; (k) the agent for the Giraffe 

Junior Mezzanine Loan and the advisors and counsel thereto; (l) the administrative agent for the 

prepetition European and Australian Asset-Based Revolving Credit Facility and the advisors and 

counsel thereto; (m) the administrative agent for the Senior Unsecured Term Loan Facility and the 

advisors and counsel thereto; (n) the indenture trustee for the Debtors’ 7.375% Senior Notes and 

the advisors and counsel thereto; (o) the indenture trustee for the Debtors’ 8.75% Unsecured Notes 

and the advisors and counsel thereto; (p) counsel to the ad hoc group of the Term B-4 Holders; 

(q) counsel to the Ad Hoc Group of Taj Noteholders; (r) the monitor in the CCAA proceeding and 

counsel thereto; (s) the Debtors’ Canadian Counsel; (t) the Internal Revenue Service; (u) the office 

of the attorneys general for the states in which the Debtors operate; (v) the Securities and Exchange 

Commission; (w) counsel to the Purchaser, via email only at AKWalker@mintz.com and (x) any 

party that has requested notice pursuant to Bankruptcy Rule 2002. The Debtors submit that, in 

light of the nature of the relief requested, no other or further notice need be given.

No Prior Request

31. No prior motion for the relief requested herein has been made to this or any other 

court.

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Richmond, Virginia

Dated: May 2, 2018

/s/ Jeremy S. Williams

KUTAK ROCK LLP KIRKLAND & ELLIS LLP

Michael A. Condyles (VA 27807) KIRKLAND & ELLIS INTERNATIONAL LLP

Peter J. Barrett (VA 46179) Edward O. Sassower, P.C.

Jeremy S. Williams (VA 77469) Joshua A. Sussberg, P.C. (admitted pro hac vice)

901 East Byrd Street, Suite 1000 601 Lexington Avenue

Richmond, Virginia 23219-4071 New York, New York 10022

Telephone: (804) 644-1700 Telephone: (212) 446-4800

Facsimile: (804) 783-6192 Facsimile: (212) 446-4900

Email: Michael.Condyles@KutakRock.com Email: edward.sassower@kirkland.com

Peter.Barrett@KutakRock.com joshua.sussberg@kirkland.com

Jeremy.Williams@KutakRock.com

-andCo-Counsel to the Debtors

and Debtors in Possession James H.M. Sprayregen, P.C.

Anup Sathy, P.C. 

Chad J. Husnick, P.C. (admitted pro hac vice)

Emily E. Geier (admitted pro hac vice)

300 North LaSalle

Chicago, Illinois 60654

Telephone: (312) 862-2000

Facsimile: (312) 862-2200

Email: james.sprayregen@kirkland.com

 anup.sathy@kirkland.com

 chad.husnick@kirkland.com

emily.geier@kirkland.com

Co-Counsel to the Debtors

and Debtors in Possession

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Exhibit A

Proposed Order

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KE 53178909

Edward O. Sassower, P.C. James H.M. Sprayregen, P.C.

Joshua A. Sussberg, P.C. (admitted pro hac vice) Anup Sathy, P.C.

KIRKLAND & ELLIS LLP Chad J. Husnick, P.C. (admitted pro hac vice)

KIRKLAND & ELLIS INTERNATIONAL LLP Emily E. Geier (admitted pro hac vice)

601 Lexington Avenue KIRKLAND & ELLIS LLP

New York, New York 10022 KIRKLAND & ELLIS INTERNATIONAL LLP

Telephone: (212) 446-4800 300 North LaSalle

Facsimile: (212) 446-4900 Chicago, Illinois 60654

Telephone: (312) 862-2000

-and- Facsimile: (312) 862-2200

Michael A. Condyles (VA 27807)

Peter J. Barrett (VA 46179)

Jeremy S. Williams (VA 77469)

KUTAK ROCK LLP

901 East Byrd Street, Suite 1000

Richmond, Virginia 23219-4071

Telephone: (804) 644-1700

Facsimile: (804) 783-6192

Co-Counsel to the Debtors and Debtors in Possession

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

)

In re: ) Chapter 11

)

TOYS “R” US, INC., et al.,

1

) Case No. 17-34665 (KLP)

)

Debtors. ) (Jointly Administered)

)

ORDER (I) AUTHORIZING THE DEBTORS TO PROVIDE 

TRANSITION SERVICES, (II) AUTHORIZING THE DEBTORS TO 

TAKE ANY CORPORATE ACTION NECESSARY TO CONSUMMATE THE

CENTRAL EUROPEAN SALE, (III) AUTHORIZING CERTAIN DEBTORS TO

ENTER INTO RELATED AGREEMENTS, AND (IV) GRANTING RELATED RELIEF

Upon consideration of the motion (the “Motion”)2 of the above captioned debtors and 

debtors in possession (the “Debtors”) for the entry of an order (this “Order”): (a) authorizing the 

 

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification 

number, are set forth in the Order (I) Directing Joint Administration of Chapter 11 Cases and (II) Granting 

Related Relief [Docket 78]. The location of the Debtors’ service address is One Geoffrey Way, Wayne, 

New Jersey 07470.

2 Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Motion, 

the Sale and Purchase Agreement, the First Day Declarations, or the Debtors’ Motion for Entry of Interim and 

Final Orders (I) Authorizing the TRU TAJ Debtors to Obtain Postpetition Financing, (II) Authorizing the TRU 

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2

Debtors to take any corporate action necessary to consummate the sale (the “Central European 

Sale”) of non-Debtor TRU (UK) H8 Limited’s (the “Seller”) equity interest in Toys “R” USHandelsgesellschaft (“Toys Austria”), Toys “R” Us GmbH (“Toys Germany”), and Toys “R” Us 

AG (“Toys Switzerland,” and together with Toys Austria and Toys Germany, the “Central 

European Business”) to Smyths Toys EU HQ Limited (the “Purchaser”) contemplated by that 

certain Sale and Purchase Agreement3entered into by and among the Seller and Purchaser on 

April 21, 2018 (the “Sale and Purchase Agreement”), including: (i) to the extent necessary, 

authorizing the applicable Debtors, including Toys Inc. and the Tru Taj Debtors to provide any 

instructions and consents necessary to effectuate and implement the Sale and Purchase Agreement, 

(ii) authorizing Toys “R” Us—Delaware, Inc. (“Toys Delaware”) to enter into Transition Services 

Agreement and Transition Services Support Agreement in connection with the Sale and Purchase 

Agreement, (iii) confirming the Release Deeds substantially in the form attached to the Sale and 

Purchase Agreement as Annex 2.8.2, and (iv) authorizing Toys “R” Us, Inc. (“Toys Inc.”) and 

Toys “R” Us Europe, LLC (“Toys Europe”) to enter into the Waiver and Release of Contingent 

Interests, current form of which is attached to the Sale and Purchase Agreement as Annex 2.4.3 

(the “Waiver and Release Agreement”); and (b) granting related relief, including the release of 

certain intercompany claims subject to the reservation of rights contained herein, all as more fully 

set forth in the Motion; and the Court having considered the Tempke Declaration; and the upon 

having found that it has jurisdiction to consider this Motion and the relief requested therein in 

accordance with 28 U.S.C. §§ 157 and 1334; and the Court having found that consideration of the 

 

TAJ Debtors to Use Cash Collateral, (III) Granting Liens and Providing Superpriority Administrative Expense 

Status, (IV) Granting Adequate Protection to the Prepetition Lenders, (V) Modifying the Automatic Stay, (VI) 

Scheduling a Final Hearing, and (VII) Granting Related Relief [Docket No. 32], as applicable.

3 A copy of the Sale and Purchase Agreement is attached hereto as Exhibit 1. 

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3

Motion and the relief requested therein is a core proceeding pursuant to 28 U.S.C. § 157(b)(2) and 

that it may enter a final order consistent with Article III of the United States Constitution; and the 

Court having found that venue is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409; 

and the Court having found that the Debtors provided due and proper notice of the Motion that is 

adequate and appropriate under the particular circumstances; and the Court having held a hearing 

to consider the relief requested in the Motion (the “Hearing”); and upon consideration of the record 

of the Hearing, and all proceedings had before the Court; and the Court having found and 

determined that the relief sought in the Motion is in the best interests of the Debtors’ estates, their 

creditors, and other parties in interest, and that the legal and factual bases set forth in the Motion 

and the Tempke Declaration and at the Hearing establish just cause for the relief granted herein; 

and upon all of the proceedings had before the Court; and any objections to the relief requested 

herein having been withdrawn or overruled on the merits; and after due deliberation and sufficient 

cause appearing therefor, it is HEREBY ORDERED THAT:

1. The Motion is granted as set forth herein.

2. Each applicable Debtors is authorized and directed to enter into the 

Transition Services Agreement, Transition Services Support Agreement, Release Deeds, and 

Waiver and Release Agreement, and perform thereunder. Specifically, (a) the Toys Inc. directors 

(or any agent, representative, or manager acting on their behalf) are authorized and directed to 

execute the Waiver and Release Agreement, (b) the Taj Holders (or any agent or representative 

acting on their behalf) are authorized and directed to execute the Release Deeds, and (c) Toys 

Delaware is authorized to enter into the Transition Services Agreement and Transition Services 

Support Agreement.

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3. Except as set forth in the Waiver and Release Agreement, all parties reserve 

all rights with respect to the Contingent Interests.

4. Notwithstanding anything in the Sale and Purchase Agreement to the 

contrary, the Debtors agree that any intercompany claims that any Debtor or non-debtor affiliate 

held against Toys Germany, Toys Austria, and/or Toys Switzerland as of the date of closing the 

Sale and Purchase Agreement will be released as to the Purchaser only, and each Debtor or 

non-debtor affiliate with valid intercompany claims against the entities sold to the Purchaser as of 

such date shall be allowed to assert such intercompany claims against the proceeds of the Central 

European Sale in the same priority as such intercompany claims had against the applicable entities 

sold to the Purchaser; provided that the proceeds of the Central European Sale may be used to 

repurchase or redeem the Taj DIP Notes (subject to obtaining applicable waivers) and any such 

intercompany claims shall be trued up from distributions from the Taj Debtors estates, whether 

under a chapter 11 plan or otherwise (but in all cases subject to a further order of the Court or 

consent of the applicable parties). All parties reserve all rights and defenses related to any such 

intercompany claims, other than that such claims have been released pursuant to this Order. 

5. To the extent required, the Debtors are authorized, but not directed, to take 

all such corporate actions as are desirable or necessary to implement the Central European Sale 

and this Order, including approving, effectuating, and consummating the Central European Sale, 

using the proceeds of the Central European Sale to repurchase or redeem the Taj DIP Notes after 

making payments to the escrow accounts contemplated by, or in connection with the transactions 

contemplated by, the Sale and Purchase Agreements, and entering into any agreements related 

thereto. For the avoidance of doubt, the Debtors are authorized, but not directed, to consent to any 

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5

agreements consistent with this Order or direct the Non-Debtor Affiliates to effectuate any 

agreement or task consistent with this Order.

6. This Order shall constitute the findings of fact and conclusions of law and 

shall take immediate effect upon execution hereof.

7. To the extent the automatic stay provisions of section 362 of the Bankruptcy 

Code would otherwise apply, such provisions are vacated and modified to effectuate all terms and 

provisions of this Order, including, without limitation, to permit any notices contemplated by and 

in accordance with the Waiver and Release Agreement without further order of the Court.

8. Notwithstanding anything to the contrary in the Order (I) Authorizing the 

Employment and Retention of Lazard Frères & Co. LLC as Investment Banker to the Debtors and 

Debtors in Possession, Effective Nunc Pro Tunc to the Petition Date, (II) Modifying Certain Time 

Keeping Requirements, and (III) Granting Related Relief [Docket No. 732] (the “Lazard Retention 

Order”) or the Order (I) Establishing Procedures for Interim Compensation and Reimbursement 

of Expenses for Retained Professionals and (II) Granting Related Relief [Docket No. 746], the 

Partial Company Sale Transaction Fee (as defined in the engagement letter attached as Exhibit 1

to the Lazard Retention Order) payable by the Debtors to Lazard Frères & Co. LLC (“Lazard”) on 

account of the Central European Sale pursuant to the Lazard Retention Order is hereby approved 

and allowed on a final basis as an administrative expense pursuant to sections 330 and 503(b) of 

the Bankruptcy Code and shall be remitted directly to Lazard from the proceeds of the Central 

European Sale, subject to paragraph 16 of the Lazard Retention Order.

9. To the extent any of the deadlines set forth in this Order do not comply with 

the Local Rules, such Local Rules are waived and the terms of this Order shall govern.

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10. Notwithstanding the possible applicability of Bankruptcy Rules 4001, 

6004(h), 6006(d), 7062, 9014, or otherwise, this Court, for good cause shown, orders that the terms 

and conditions of this Order shall be immediately effective and enforceable upon its entry.

11. This Court shall retain jurisdiction with respect to all matters arising from 

or related to the implementation, interpretation, or enforcement of this Order. 

Dated: __________, 2018

Richmond, Virginia THE HONORABLE KEITH L. PHILLIPS

UNITED STATES BANKRUPTCY JUDGE

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WE ASK FOR THIS:

/s/ Jeremy S. Williams 

Michael A. Condyles (VA 27807)

Peter J. Barrett (VA 46179)

Jeremy S. Williams (VA 77469)

KUTAK ROCK LLP

901 East Byrd Street, Suite 1000

Richmond, Virginia 23219-4071

Telephone: (804) 644-1700

Facsimile: (804) 783-6192

- and -

Edward O. Sassower, P.C.

Joshua A. Sussberg, P.C. (admitted pro hac vice)

KIRKLAND & ELLIS LLP

KIRKLAND & ELLIS INTERNATIONAL LLP

601 Lexington Avenue

New York, New York 10022

Telephone: (212) 446-4800

Facsimile: (212) 446-4900

- and -

James H.M. Sprayregen, P.C.

Anup Sathy, P.C. 

Chad J. Husnick, P.C. (admitted pro hac vice)

Emily E. Geier (admitted pro hac vice)

KIRKLAND & ELLIS LLP

KIRKLAND & ELLIS INTERNATIONAL LLP

300 North LaSalle

Chicago, Illinois 60654

Telephone: (312) 862-2000

Facsimile: (312) 862-2200

Co-Counsel to the Debtors and Debtors in Possession

CERTIFICATION OF ENDORSEMENT 

UNDER LOCAL BANKRUPTCY RULE 9022-1(C)

Pursuant to Local Bankruptcy Rule 9022-1(C), I hereby certify that the foregoing proposed order has been 

endorsed by or served upon all necessary parties.

 /s/ Jeremy S. Williams

 

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Exhibit 1

Sale and Purchase Agreement

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