Management at Melbourne based distributor Directed Electronics have not said how much money they face losing following the collapse of retailer Toys ‘R’ Us who recently moved to appoint voluntary administrators.

Back in March we revealed that the distributor of Eufy and Anker products in Australia purchased 18.9% of the failed retailers shares despite the business being on the brink of collapse, it’s not the first time that the business has faced liquidity problems with the business previously collapsing in 2017.

Recently Toys R Us ANZ advised that the Companies local directors had called in BDO as Voluntary Administrators, effective immediately with questions being raised about tax losses and the impact on suppliers and what was the benefit of the investment by Directed Electronics to the retailer, which came at a time when the business was predicting their own demise.

It’s also not known who the other creditors are other than financial institutions who have loaned money to the business.

The collapse of the business came after Channel News exclusively reported earlier this year that Directed Electronics had secured a 3 year contract with Toy’s R Us an and that their option would extend for two additional 12 month periods with Toy’s R Us paying Directed an annual fee of $1.2 million, via the through the issuance of options convertible to ordinary shares in the Company, and cash if they can’t allocate shares.

Directed Electronics CEO Steve Siolis

What’s not known is whether any part or if any of that fee has been paid to Directed management.

At the time we raised the question that if the retailer failed as was tipped they would, why did Directed Electronics invest in a questionable Company especially when they have contracts with major retailers including JB Hi Fi, Harvey Norman, The Good Guys and Wesfarmers stores including Bunnings and Officeworks.

As part of the deal Directed claimed that they were set to undertake market analysis and product development for the retailer which according to observers was seen as a strange move.

In March 2025 Toys R Us’ directors claimed that they were in talks with its lenders to restructure the terms of its term loans because of the $12.8 million gap between what the company owed and the total value of its assets.

In their latest spin on their failure TRU claim that the reason for the voluntary administration move was because the business is likely to become, insolvent and no longer in a position to pursue a solvent recapitalisation plan”.

Management claim that the company is no longer in a position to pursue a solvent recapitalisation plan,” with questions raised as to why Directed Electronics did who are seen as a smart Company purchased shares and how much they paid for the share if anything at all.

The administrators claim that they are now in control of the business and are set to undertake an independent assessment while keeping operations running where possible.

Trading on the ASX has been suspended pending further announcements.

The administration comes just one week after Toys R Us ANZ released an improved trading update.

Sales in the most recent quarter reached $863,000, up from $779,000 Vs same period last year.

Gross profit more than doubled, and product margins surged from 22 percent to 39 percent.

The business has also been expanding its drop shipping operations, listing more than 1,100 SKUs through third-party platforms.

“The Board and management team have worked tirelessly over the quarter, focused on driving operational efficiencies and implementing robust marketing strategies. This work is now achieving better outcomes for the business and demonstrating the capability to deliver profitable operations when fully funded,” said Executive Chair Kelly Humphreys.

Back in March Toys R Us claimed it was able to operate because it could still draw an extra $1.215 million from American hedge fund Mercer Street Capital Partners, which had extended a $5 million line of credit.

The company also said it had $2.7 million returned after surrendering a warehouse lease in Melbourne’s southeast.

It will save around $1 million a year from the sublease of a smaller warehouse.

The company’s largest shareholder is former Funtastic chief executive Nir Pizmony, who owns about 34 per cent.