Linens 'n Things Files Bankruptcy Cases
Home furnishings retail giant Linens 'n Thing has filed a Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware, where the Honorable Christopher S. Sontchi is presiding over the cases. Linens 'n Things operated 589 retail stores in the United States and Canada.
According to the affidavit that the debtors' Chief Financial Officer filed in support of their first day motions, a number of external factors led to a steep decline in the debtors' profitability and liquidity that has prevented the debtors from continuing their plans to turn around the retailer. The chief factors cited were the decline in the housing market and tightening of credit markets that have led to a decline of discretionary spending in the housewares and home furnishing sector.
The cases comprise thirteen (13) debtors with approximately 120,000 creditors. The debtors have sought permission to pay pre-petition wages and benefits to their approximately 15,900 U.S. employees.
Rampant Internet-based rumors in recent months urged customers to use gift cards from Linens 'n Things amid speculation that the chain would declare bankruptcy. However, the debtors sought permission from the Court to honor gift card and certain other customer obligations in the ordinary course. The Court has approved this request.
