Toys “R” Us Inc.’s lawyers and advisers have shot down an 11th-hour offer from a billionaire toy maker that would have kept some of its U.S. stores open, according to a person familiar with the matter.

Isaac Larian, the founder of Bratz dolls maker MGA Entertainment Inc., came forward last week with a $675 million bid for the bankrupt retailer’s U.S. stores. The offer included an additional bid of $215 million for the retailer’s Canadian operations.

Mr. Larian’s offer didn’t meet the qualified bid threshold under the court-approved auction procedures, the person said, and the retailer has taken it off the table.

Mr. Larian said on Tuesday that he hadn’t been informed yet that the bid wasn’t qualified. “If that’s the case, it’s really a shame that they’re going to let this company go into liquidation instead of at least responding and saying we need more or we need this,” he said.

The company’s lawyers and advisers are still evaluating the other bids they received for the Canadian operations, and it’s unclear if any include keeping U.S. stores open, the person added.

An auction is slated to take place on Wednesday, court papers show.

In March, Toys “R” Us announced it would wind down its U.S. business after it became apparent the retailer would be unable to reorganize its debt and move forward. The retailer, which employs about 33,000 people in the U.S., is in the process of liquidating all of the inventory at its 735 stores.

Despite plans to close the U.S. business, Toys “R” Us said it would put its better-performing Canadian operations up for sale. The Canadian sale procedure includes the option to acquire 200 of the top performing U.S. stores as an effort to keep the American presence alive.

Mr. Larian’s offer came after he launched a $1 billion crowdfunding platform last month in hopes of saving a portion of the toy chain. The effort has raised $62,000, on top of the $200 million Mr. Larian said he raised toward the goal from himself and traditional investors. Mr. Larian set a May 28 deadline for the crowdfunding toward the bid.

Toys “R” Us filed for bankruptcy protection in September after struggling with more than $5 billion in debt from a leveraged buyout. It also was squeezed by competition from Inc. as more parents shop online, as well as by discount retailers such as Walmart Inc.

In addition to the Canadian operations, Toys “R” Us is floating the sale of its Asian business. During a court hearing last week, attorney Joshua Sussberg said the retailer has received multiple bids of more than $1 billion for a majority stake in its Asian business.

Source: The Wall Street Journal April 17, 2018 | By Lillian Rizzo and Paul Ziobro