Linens 'n Things Files Chapter 11
News From "Home Textiles Today" -- Gifts and Dec, 5/2/2008 9:00:00 AM
Wilmington, DE – Roughly two weeks after delaying a $16.1 million interest payment, Linens 'n Things filed for Chapter 11 bankruptcy protection this morning. The $2.8 billion, 589-store specialty chain will close 120 stores. News of the filing was reported by Home Textiles Today, (HTT) sister publication to Gifts & Decorative Accessories.
In addition to household linens, bathroom and kitchen accessories, LNT sells a wide variety of gift products. This merchandise includes gifts for wedding party members, picture frames, engraved and monogrammed gifts, gourmet gift baskets, candle accessories and more. The retailer also sells its gift products, as well as other merchandise, online.
In a move seemingly related to the bankruptcy protection filing, Robert J. DiNicola resigned as the retail chain's president and CEO, but will remain executive chairman. Michael F. Gries was appointed CEO and chief restructuring officer. Gries is a co-founder of Conway, Del Genio, Gries & Co., which was hired two weeks ago to provide restructuring management services to LNT. F. David Coder, formerly the executive vice president, store operations, was promoted to President and COO of the retailer.
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 the HTT report.
One vendor said its sales department received a telephone call late yesterday from Linens 'n Things headquarters asking the question: "Are you ready? We're ready to go."
The reference was to resuming shipping following the filing and establishing 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 Linens 'n Things 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 December 29, 2007. Leading the list of the largest 30 unsecured creditors is Yankee Candle, which is owed more than $4.5 million.
Linens 'n Things stated that the Chapter 11 petition may trigger a default in its repayment obligations. However, the company believes efforts to enforce those obligations will be stayed as a result of the bankruptcy filing.
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