Toy Giant Files for Bankruptcy

Staff Writter, Dec 23, 2008

There are few toy giants in the industry. You’ve probably heard of most of them. Toys R Us, FAO Schwartz, KB Toys, and a few others. KB Toys started out as a family-owned business in 1922 and filed for bankruptcy protection in 2004 and subsequently was able to sell the company to Prentice Capital Management Inc. in 2005. Over the years, KB Toys has been recognized as one of the most successful toy giants in the industry.

KB Toys is just one of many retail giants finding it necessary to file for bankruptcy amidst the economic crisis that is impacting the United States and may other countries around the world. “The liquidity crisis is directly attributable to a sudden and sharp decline in consumer sales due to macro-economic forces”, KB Toys cited in court papers.

Though one of the largest U.S. toy retailers, KB Toys filed for Chapter 11 bankruptcy protection this month and plans to close all its stores to start liquidation sales midway into the holiday season. As disruptive as this may seem, KB Toys hopes that closing the approximate 460 stores while trying to locate a buyer for the wholesale distribution unit may help to offset things. The toy retailer plans to continue going-out-of-business sales as it searches for a wholesale distribution buyer.

Other giants such as Value City, Farmer Jack and others have experienced the same crunch of the economy’s devastation and had to close their doors after selling off as much stock as possible at rock bottom prices. Perhaps it will be a merrier Christmas for those who can afford to get and at take advantage of the sales KB Toys will be offering during this holiday season.

On the flip side of the savings, KB Toys employs nearly 11,000 employees, more than 6,500 who are seasonal. Approximately 277 stores in malls and 30 stores which are only open seasonally are set to close in January.

While proceedings have not begun, official papers have been filed and the first bankruptcy court hearing for the famed toy giant KB Toys is scheduled for this month. So long to one of the best toy stores there was. Hello empty mall storefronts. What’s next as the economy drudges further into recession remains to be seen.