Linens 'n Things files Chapter 11
May 2, 2008-- Home Textiles Today,
Wilmington, Del. – Roughly two weeks after delaying a $16.1 million interest payment, Linens 'n Things this morning filed for Chapter 11 bankruptcy protection.
The $2.8 billion, 589-store specialty chain said it will close 120 stores.
The company, which is controlled by Apollo Management, had been searching in recent weeks for a solution to a mounting financial crisis, including an infusion of cash by its existing owner or new investors. There was also speculation that Apollo may have been buying up blocks of its own secured debt in order to enhance its standing in the eventuality of a bankruptcy filing.
According to one vendor, its sales department late yesterday received a telephone call from LNT headquarters asking the question: "Are you ready? We're ready to go."
The reference was to resume shipping following the filing and the establishment of debtor-in-possession (DIP) financing. Included in the first day motions filed with the petition was one to pay critical vendor claims and employee wages in order to keep LNT as a going concern.
DIP financing is being arranged through General Electric Credit Corporation and other so far unidentified lenders. The DIP credit facility will consist of a revolver up to $700 million, with a $400 million sub-limit for letters of credit. The Canadian revolver will go up to $50 million.
The bankruptcy petition listed total assets of $1.7 billion, with total debt of $1.4 billion as of Dec. 29, 2007.
Included among the largest 30 unsecured creditors were Aeolus Down, $4.3 million; Brentwood Originals, $3.5 million; Regal Home, $3.1 million; Croscill, $2.1 million; Royale Linens, $2.0 million; Maples Industries, $1.9 million; Homestead International Group Import, $1.8 million; Pacific Coast Feather, $1.6 million; India Ink, $1.3 million; Richloom Home Fashions, $1.2 million; S. Lichtenberg & Co., $1.2 million; and CHF Industries Import, $1.1 million.