Linens ?n Things unravels, files for Chapter 11

Linens æn Things unravels, files for Chapter 11 Linens 'n Things, the nation's second-largest housewares retailer, filed for Chapter 11 protection Friday in Delaware's bankruptcy court.
   The Clifton, N.J.-based retailer, which employs 17,000 workers, said it will restructure its finances under court protection and close a 'significant number' of underperforming stores in its 600-store chain.
   The firm, which has long-suffered criticism for an abundance of undersized and old stores, lost $242 million last year. Private equity firm Apollo Management took the chain private in 2006 at a cost of $1.3 billion.
   The implosion of the U.S. home-buying market and the ongoing credit crunch, which have diminished consumer spending, have both hit the retailer hard. In addition, nervous suppliers have reigned in the firm's ability to obtain credit and product supply in recent months.
   Chief Executive Robert DiNicola, brought in by Apollo to turn the retailer around, told the North Jersey Record that his efforts have been frustrated 'by a very difficult external environment that began almost from Day One as the housing markets, particularly in California and Florida, began to deteriorate. Then as we arrived in 2008, really everything started to collapse — not just the housing market but also the credit market and gas prices and all of the other economic factors that have been hammering not just us but the entire retail community.'
   DiNicola predicted that Linens 'n Things would emerge from the reorganization by the end of the year with a stronger balance sheet and financial structure.
   A $700 million injection of debtor-in-possession financing from General Electric Capital Corp. will allow the firm to pay vendors and keep stores filled with merchandise during the bankruptcy process.
   As part of the restructuring Linens 'n Things, DiNicola will become executive chairman of the firm, with Michael Gries, of the restructuring firm Conway Del Genio Gries & Co., serving as interim CEO and chief restructuring officer. Nineteen-year Linens 'n Things veteran David Coder will become president and COO.
   The firm plans to shutter 120 underperforming stores across the country during the restructuring, including about 30 in California, eliminating a total of 2,500 sales jobs.
   However, Linens 'n Things officials sought to assure the 400,000 holders of $40 million in outstanding gift cards that the cards would be honored and not frozen during the bankruptcy proceedings. Officials for the firm also said that wedding registries would continue to remain available.