FAO Inc., the King of Prussia-based bankrupt toy retailer, announced that “unexpected complications” in completing its bankruptcy exit funding have led to the withdrawal by the purchasers of its equity in connection with its planned emergence from bankruptcy.
Completion of the funding is a condition to the company's planned emergence from bankruptcy, previously set for April 18, 2003. The retailer's right to use cash for debts it owes to its lenders expires on April 18, unless extended by lenders.
FAO Inc., a family of children's specialty retailing operating under names FAO Schwarz, Zany Brainy and Right Start stores, said it is exploring all options, including obtaining replacement equity funding, a sale of all or portions of its operations and liquidation.