A wave of financial distress continues to engulf Toys “R” Us Canada, as yet another landlord has launched a lawsuit alleging unpaid rent. RioCan Holdings Inc. claims the retailer failed to meet its financial obligations for a Toronto location, escalating a pattern of similar legal challenges.
The latest claim centers around a space at the Lawrence Allen Centre, where RioCan alleges Toys “R” Us Canada neglected to pay rent last month. After a formal warning on January 5th demanding payment within seven days, RioCan followed through with lease termination on January 20th, according to court filings.
This isn’t an isolated incident. The current lawsuit mirrors at least seven others filed over the past year, painting a troubling picture of the retailer’s financial health. Collectively, these suits demand approximately $31.3 million in unpaid rent and associated damages.
The situation remains fluid, as none of the claims have been proven in court. Toys “R” Us Canada has, in some cases, denied the allegations and disputed the amounts claimed, but a consistent pattern of non-payment is emerging.
RioCan is now seeking roughly $4 million from Toys “R” Us Canada, encompassing the missed January rent of around $43,000, alongside millions more stemming from the long-term lease agreement. That lease, covering over 15,000 square feet, wasn’t set to expire until 2035.
The lease agreement included a standard clause allowing RioCan to terminate the contract and demand additional rent if payment wasn’t received and the issue wasn’t resolved within a week of notification. This provision has been utilized in multiple lawsuits against the retailer.
The number of operational Toys “R” Us Canada stores is increasingly unclear. Once boasting 81 locations after its 2018 acquisition, the company website now lists only 40. Reports suggest even those listed may be closed or facing eviction notices.
Distress signals are mounting. Online listings show some properties offered for as little as $1, and a recent auction saw the retailer’s headquarters equipment – including trailers and forklifts – sold off just before the holidays.
The legal battles extend beyond RioCan. Another lawsuit, initially filed by RioCan and its affiliate, involved allegations of unpaid rent at locations in Calgary and Orleans, Ontario. While the Calgary claim was dropped, the dispute in Orleans continues.
Toys “R” Us Canada argues in its defense that it proactively informed the landlord of the impending store closure and even proposed a replacement tenant to assume the lease. However, the landlord allegedly refused to accept the proposed tenant.
The parent company, Putman Investments, has a complex portfolio of retail brands, including HMV, Sunrise Records, and others. However, it has also recently shuttered several ventures, including T. Kettle stores and a home goods concept called Rooms + Spaces.
Adding to the concerns, Everest Toys, a sister company founded by the father of Putman Investments’ leader, was forced into receivership last year, further highlighting the financial challenges within the broader organization.
