Dive Brief:

• Toys R Us has a stalking horse bidder for its Canadian unit that will set the minimum at an upcoming auction. The bankrupt toy retailer said in a court filing Thursday that Fairfax Financial Holdings, a Toronto-based investment firm, has offered $300 million Canadian dollars (or about $236 million U.S.) as a base price for the unit. The bid also includes a break-up fee and money to pay off some bankruptcy claims against the subsidiary. 
• The retailer had extended a bid deadline and this week adjourned an auction for the unit. It also reportedly rejected a bid from MGA Entertainment CEO Isaac Larian that proposed to buy the Canadian business for $215 million. Larian's bid also included $675 million to keep some 200 U.S. Toys R Us stores operating, a provision not included in Fairfax's bid. A spokesperson for Larian declined to comment on whether the toy mogul would match the Fairfax bid.
• Toys R Us has rescheduled the auction for its Canadian unit for April 23 and has asked the court to schedule a hearing the following day to rule on the winning bid.

Dive Insight:

The good news for Toys R Us is that the company has a baseline bidder for its Canadian unit that sets the price above what Larian had offered. The bad news is that this bidder hasn't proposed dropping an extra half billion dollars and change to keep alive a Toys R Us presence in the U.S.

Larian has expressed determination to do so in the past. After news broke that Toys R Us had rejected his bid, he told Retail Dive and other media outlets in a statement that he still expected to participate in the bid process.

"We feel confident that we submitted a fair valuation of the company's U.S. assets in an effort to save the business and over 130,000 domestic jobs," he said.

The clock is ticking as Toys R Us goes through the motions of winding down its U.S. business and closing its domestic store fleet. Larian himself said in previous statements, "The time is now. Everyday that goes by, the value of Toys R Us declines and more people lose their jobs."

But the retailer's creditors, and especially its bankruptcy loan financiers, wield much power in the Chapter 11 process. Those stakeholders are likely far less concerned with preserving jobs and Toys R Us' cultural place in the country than they are about getting repaid.

If Larian or any other potential suitor is to save some chunk of Toys R Us in its home country, they'll have to do more than issue platitudes about jobs and the retailer's history. More specifically, they'll have to pony up some money.

While its brand could survive in some fashion, as is often the case with liquidated retailers, the chances it will maintain a significant store presence keep dwindling. If Toys R Us does indeed shutter substantially all of its U.S. operations, it will leave behind a $1.3 billion hole in the toy market. It would also leave the country without a national dedicated toy store chain.