LNT adds 28 to closing list
August 13, 2008-- Home Textiles Today,
Wilmington, Del. — Linens ’n Things now wants to close 85 stores in its second round of liquidations — 28 units more than the 57 announced and just two shy of the original 87 planned, after failing to reach time extension agreements with landlords.
The disclosure in court documents late Friday comes even as the retailer is still awaiting the emergence of a stalking horse bidder for the going-out-of-business-sale auction, following three postponements of hearings since last week. The next hearing is slated for Thursday, at which time bid protections are scheduled to be considered.
The auction itself was originally scheduled for today.
LNT was forced to act in order to remain out default on its $700 million debtor-in-possession financing agreement. The company won a waiver of that agreement in July, averting a default, after it failed to hit budgeted sales for two consecutive four-week periods. Part of the waiver required that the company keep open at least 80 percent of its stores unless landlords granted an extension of the allowable time to accept or reject the leases. The company must begin the liquidations by the end of August.
Shortly after announcing it would close 87 stores in the second round, LNT filed a list of 59 stores with the bankruptcy court, then further trimmed it by two, to 57. At the time, interim ceo Michael Gries indicated that the list was shortened because some stores were doing better than expected. However, a court transcript indicated that the list was shortened because LNT believed it could reach understandings with landlords in those additional locations.
Bankruptcy law provides debtors with up to 210 days to decide whether to accept or reject leases.
The closures will come on the heels of the original 120 stores closed by LNT. Some of those stores are still in the closing process. The auction to sell the 120 leases yielded only five sales.
Following the second round of liquidations, the company will emerge with 384 stores — 35% fewer units than it had in December 2007.
Gries said some weeks ago that he was about to complete the company’s new business plan, and those close to the company indicated that he had. However, the plan has still not been made public or been widely disseminated among trade creditors.