It has been an emotional time for Americans who were once, as the commercials would say, “Toys R Us kids.” The Wayne, N.J.-based toymaker filed for Chapter 11 bankruptcy protection on Monday in order to restructure some billion in debt. Toys R Us has been battered in recent years by stiff competition from Amazon, Walmart and Target, but the overhang of a .6 billion leveraged buyout in 2005 made its financial troubles worse. More than .3 billion of the buyout was financed by debt .

Even so, the bankruptcy protection could provide Toys R Us with ways to stabilize its finances, said Wharton management professor Daniel Raff .…