LNT wind-down picks up speed
Home & Textiles Today Staff -- Home Textiles Today, October 31, 2008
Clifton, N.J. — Inventories are nearly hitting the ceilings of Linens ’n Things stores once again — the stores look full, as they otherwise should, well into the fourth quarter nearing the holiday season. The scenes almost belie the bold “Everything Must Go” signs that hang from overhead.
LNT is hurtling forward to its own end. Among other developments, the company last week canceled its deferred compensation programs, reported a moderating net loss (mostly resulting from store closures) and its parent, Apollo Management, agreed to give its unsecured creditors committee key documents it had sought to withhold.
The consent order by U.S. Bankruptcy Court judge Christopher Sontchi was sweeping — demanding that Apollo produce documents and offer testimony across a broad range of LNT’s operational and financial dealings, including:
• All documents relevant to LNT’s financial condition from June 2005 through the bankruptcy, including business plans, budgets and forecasts;
• All documents relating to the company’s 2006 leveraged buyout, including the sources and uses of cash and all communications in connection with the LBO;
• All presentations and documents prepared for lenders and shareholder loans;
• Documents related to the organization of senior management and changes; as well as those concerning the management services agreement;
• Any communications concerning LNT and its performance, particularly involving former chairman and ceo Robert DiNicola or any other member of senior management or the board of directors;
• Any upstreamed funds or payments made by LNT to Apollo;
• And, documents relating to LNT’s viability and solvency status from the LBO to present.
A similar, but considerably narrower, ruling was issued last month for one of LNT’s noteholders, Levine Leichtman Capital Partners. Both inquiries, called Rule 2004 examinations, will take place out of public view under protective confidentiality orders.
In the meantime, Linens filed its monthly operating report for September showing a net loss of $8.3 million, compared to August’s net loss of $16.1 million. However, after bankruptcy expenses of $168.4 million, LNT’s total net loss increased to $176.6 million for the month.
Gross revenues contracted to $111.9 million for the month. They were $118.6 million in August. The company did not provide year-over-year comparisons in the report. Total professional fees among eight billing entities totaled $2.6 million for September; $3.2 million year to date.