Bedding- and home-furnishing retailer Linens 'n Things on Friday filed for Chapter 11 bankruptcy protection, the latest major retailer to succumb to the difficult consumer environment.
The company's parent, Linens Holding Co., filed a petition in bankruptcy court in Delaware.
The company named Michael Gries of the restructuring firm Conway Del Genio Gries & Co. as chief restructuring officer and interim chief executive. Current CEO Robert DiNicola will become executive chairman. It also said it will close 120 stores, almost a quarter of them in California.
In the filing, Linens 'n Things said it has less than 50 creditors and said funds will be available for distribution to unsecured creditors. It has arranged $700 million in debtor-in-possession financing, mainly from General Electric Capital Corp.
Linens 'n Things, bought by investment firm Apollo Management in 2006, has been struggling with profitability. In March it reported a fiscal 2007 loss of $242.1 million.
The Clifton, N.J.-based company said external economic factors, including the decline in the housing market, tightening credit markets, and a downturn in consumer discretionary spending, particularly in the housewares and home furnishings sector, led to a "precipitous decline" in profitability and liquidity.
The factors worsened in the first quarter of 2008, the company said.
Linens 'n Things, which operates about 589 retail stores in 47 states, is the latest retailer to be hit by the weakening retail environment as consumers cut back. Sharper Image Corp. and Lillian Vernon Corp. filed for bankruptcy protection in February.
Filing for Chapter 11 under the bankruptcy code frees a company from the threat of creditor lawsuits while it reorganizes its finances.