Virgil
12-11-2008, 11:22 PM
http://online.wsj.com/article/SB122901585422798605.html?mod=googlenews_wsj
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By PEG BRICKLEY
KB Toys Inc. has returned to Chapter 11 under Prentice Capital Management LP, the private-equity firm that bought the retailer out of bankruptcy in 2005. However, this time KB Toys is slated for liquidation.
The company plans to quickly start going-out-of-business sales at hundreds of its stores, "in order to take advantage of the last two weeks of the holiday selling season," KB Toys said in a filing with the U.S. Bankruptcy Court in Wilmington, Del.
An "expedited and orderly" bankruptcy liquidation was the only option left for KB Toys, which was hit by the slump in consumer spending that has slammed the retail sector, court documents say.
KB Toys, which is based in Pittsfield, Mass., owes about $65 million on loans to first-lien lenders, and about $30 million on letters of credit to the first-lien group. It also owes about $95 million to second-lien lenders, court documents say.
The retail operation consists of 277 stores located primarily in shopping malls, along with 40 KB Toy Works stores, which are somewhat larger and located in strip malls. Additionally, KB Toys operates 114 outlet stores and 30 temporary "holiday stores," court documents say.
There is also a wholesale distribution business, Creative Innovations and Sourcing LLC, which serves retailers including CVS Caremark Corp., Supervalu Inc. and QVC Inc. The distribution operation is also going up for sale, according to court documents.
About half of the original KB Toys outlets were shuttered during the first bankruptcy case, which was also in Delaware. A Prentice affiliate bought the remaining stores for about $20 million, and said it would attempt to revive the operation. Court documents say KB Toys held up well during the first part of this year, despite tough market conditions for companies that count on free-spending consumers.
But a slight uptick in same-store sales from February to October was followed by a nearly 20% dive in sales during the crucial post-October selling season, court documents say. That left KB Toys with no alternative but to return to bankruptcy and start going-out-of-business sales.
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=========
By PEG BRICKLEY
KB Toys Inc. has returned to Chapter 11 under Prentice Capital Management LP, the private-equity firm that bought the retailer out of bankruptcy in 2005. However, this time KB Toys is slated for liquidation.
The company plans to quickly start going-out-of-business sales at hundreds of its stores, "in order to take advantage of the last two weeks of the holiday selling season," KB Toys said in a filing with the U.S. Bankruptcy Court in Wilmington, Del.
An "expedited and orderly" bankruptcy liquidation was the only option left for KB Toys, which was hit by the slump in consumer spending that has slammed the retail sector, court documents say.
KB Toys, which is based in Pittsfield, Mass., owes about $65 million on loans to first-lien lenders, and about $30 million on letters of credit to the first-lien group. It also owes about $95 million to second-lien lenders, court documents say.
The retail operation consists of 277 stores located primarily in shopping malls, along with 40 KB Toy Works stores, which are somewhat larger and located in strip malls. Additionally, KB Toys operates 114 outlet stores and 30 temporary "holiday stores," court documents say.
There is also a wholesale distribution business, Creative Innovations and Sourcing LLC, which serves retailers including CVS Caremark Corp., Supervalu Inc. and QVC Inc. The distribution operation is also going up for sale, according to court documents.
About half of the original KB Toys outlets were shuttered during the first bankruptcy case, which was also in Delaware. A Prentice affiliate bought the remaining stores for about $20 million, and said it would attempt to revive the operation. Court documents say KB Toys held up well during the first part of this year, despite tough market conditions for companies that count on free-spending consumers.
But a slight uptick in same-store sales from February to October was followed by a nearly 20% dive in sales during the crucial post-October selling season, court documents say. That left KB Toys with no alternative but to return to bankruptcy and start going-out-of-business sales.
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