Linens 'n Things Files for Bankruptcy Protection

Linens 'n Things Files for Bankruptcy Protection
May 05, 2008

Clifton, N.J.-based Linens Holding Co., a home furnishings specialty retailer operating as Linens 'n Things (LNT), announced that the company and its U.S. subsidiaries have filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The company will continue to operate its stores without interruption during the reorganization. The filing pertains only to LNT operations in the United States--the company's Canadian stores are not included in the filing and there are no plans for a similar filing in Canada. According to the company, the decision to file for Chapter 11 protection was driven largely by the impact of the current economic downturn on its operating performance. Filing for Chapter 11 will allow the company to restructure its balance sheet, close underperforming store locations, revisit certain agreements and position it for long-term success. As part of its financial restructuring, it plans to close 120 underperforming stores across the country. LNT has requested immediate authorization and expects approval from the Court to continue paying employee salaries and benefits, as well as to honor gift cards and store credits as normal. LNT has secured $700 million in debtor-in-possession financing from General Electric Capital Corp., which will ensure healthy merchandise flow. "The significant deterioration in the mortgage, housing and credit markets and the resulting impact on the retail marketplace, particularly the home sector, has overwhelmed the operating and merchandising improvements that we have made over the past two years," said Robert J. DiNicola, executive chairman for the company. "The decision to close stores was difficult, but necessary to improve LNT's financial position and place the company on a firmer financial footing as we move forward."