K B Toys

KB Toys Inc. said it expected to emerge from bankruptcy protection before the holiday shopping season without closing more stores or cutting more jobs under an agreement that would put the chain under control of a New York investment firm. An affiliate of Prentice Capital Management would invest $20 million in the reorganized company and extend credit of as much as $25 million in exchange for 90% of the new entity's private equity common stock and all of its preferred stock.

KB Toys Inc. won Bankruptcy Court approval for a reorganization plan that gives Prentice Capital Management a 90% stake in the company. U.S. Bankruptcy Judge Walter Shapero's approval allows KB Toys to end its bankruptcy case by the end of the year. Prentice, which is controlled by hedge fund investor Michael Zimmerman, will pay $20 million for 90% of Pittsfield, Mass.-based KB Toys' common stock and supply a $25-million loan, according to court documents.

KB Toys Inc. on Tuesday said it had emerged from bankruptcy protection before the key holiday selling season, led by management chosen by its new majority owner, PKBT Funding. The emergence will give privately held KB Toys, which operates 640 mostly mall-based toy stores, a chance to participate in the increasingly cutthroat holiday toy shopping season.

KB is headed into BK. KB Toys Inc. filed for Chapter 11 bankruptcy protection Wednesday, the latest victim of a bruising holiday-season price war that forced FAO Inc. to liquidate part of its business and cut into the sales and profits of other big-name toy sellers. Pittsfield, Mass.-based KB, best known for its ubiquitous mall-based toy stores, said its restructuring could include closing as many as 500 underperforming stores.

Mall-based retailer KB Toys Inc., which filed for bankruptcy protection this month, said Wednesday that it would close at least 375 stores and cut 3,500 jobs as part of its restructuring. Pittsfield, Mass.-based KB, which is controlled by private equity firm Bain Capital, said it would announce the closures of an additional 19 to 115 stores by Feb 11. Clearance sales of as much as $122.

KB Toys Inc., the largest U.S. mall-based toy retailer, sold its Internet assets to investment firm D.E. Shaw for $7.4 million as it tried to emerge from bankruptcy protection. D.E. Shaw, a New York-based firm that this year bought FAO Inc.'s FAO Schwarz stores in New York and Las Vegas, also will make royalty payments of at least $500,000 a year for the next three years, the firm said. The purchase includes inventory, equipment and the EToys trademarks. D.E.