Linen 'n Things to close 120 stores as part of Chap. 11 restructuring
Linens ‘n Things said it has filed for protection under Chap. 11 of the US Bankruptcy Code in the US Bankruptcy Court for the District of Delaware. The company's financial restructuring plans include closing 120 underperforming stores.
Linens 'n Things' decision to file for Chapter 11 protection was driven largely by the impact of the current economic downturn on the company's operating performance, according to a statement from the company. The filing pertains only to Linens ‘n Things US operations. The company's Canadian stores, which are among the strongest performers in the chain, are not affected. As of December 29, 2007, Linens ‘n Things operated 589 stores in 47 states and seven provinces in the US and Canada.
“The significant deterioration in the mortgage, housing and credit markets and the resulting impact on the retail marketplace, particularly the home sector, has overwhelmed the operating and merchandising improvements that the company has made over the past two years,” said Robert J. DiNicola, executive chairman at Linens 'n Things, in a statement.
This is a new title for DiNicola. In the SEC filing related to the Chap. 11 filing, Linens 'n Things said DiNicola has resigned as president and CEO of the company and remains as chairman. Michael F. Gries, a noted financial restructuring expert and co-founder of Conway Del Genio Gries & Co., has been named chief restructuring officer and interim CEO. David Coder, currently executive VP, store operations, has been appointed president and COO.
By filing for Chap. 11, Linens ‘n Things hopes to restructure its balance sheet, close underperforming stores, revisit certain agreements and position the company for long-terms success.
In conjunction with the filing, Linens ‘n Things has secured $700 million debtor-in-possession financing from General Electric Capital Corp. to help insure the flow of merchandise as the company prepares for the back-to-school and holiday selling seasons.
These closings follow several months of similar news from a wide spectrum of retailers.
Home Depot said earlier in the week it would close 15 stores and scale back growth plans and Disney, having newly regained control of its stores from Children's Place, said it would close 98 locations.