Daniel Chon, former Director of Transportation at Toys “R” Us, pleaded guilty to embezzlement as the company began a debt exchange with its bondholders to extend repayment on debt coming due in the next two years. 

Chon, who managed debit cards used by delivery drivers, stole over $1.9 million over a three year period, according to the New York Post, using the money to finance luxury travel in London, Madrid, and Berlin.  He pleaded guilty in federal court and will have to pay restitution and serve 37 to 46 months in prison.

Meanwhile, Toys R Us continues to restructure its debt, a process that has been ongoing for years (see “Toys R Us Seeks Refinancing”) as it struggles under the heavy debt load taken on as part of a leveraged buy-out in 2005.  The latest is a debt swap with bondholders who hold debt coming due in the next two years.  The exchange, approved by a majority of bondholders, extends repayment until 2021 on much of the $850 million in bonds coming due through 2018. 

In its most recent quarter, the company did eke out a same store sales increase of 0.9%, but overall sales declined behind store closing, including the company’s Times Square flagship store and the FAO Schwartz flagship store.  The company lost $126 million on $2.3 billion in sales in its first quarter, an improvement from the $140 million loss in the year ago quarter.