Pick Up Your Toys

KB Toys Inc. (Pittsfield, Mass.) has gained U.S. Bankruptcy Court approval of its funding for a plan of reorganization by KBT Funding LLC, an affiliate of Prentice Capital Management LP.

The court also scheduled confirmation hearing for Aug. 18, 2005, and set Aug. 12, 2005, as the deadline for creditors to vote on the plan. Upon approval, PKBT will take control of the 650-store toy retailer. The company said it expects to emerge from Chapter 11 before the 2005 holiday season.

Under the terms of the plan, KBT Funding will invest $20 million in a reorganized KB Toys and provide a seasonal overadvance credit facility of up to $25 million in exchange for 90 percent of the common stock and 100 percent of the preferred stock. The remaining common stock will be held by a trust for the benefit of the unsecured creditors.

“KB’s associates have worked extremely hard to strengthen the company’s operations,” said KB Toys ceo Michael Glazer. “We greatly appreciate their encouragement and the continued confidence displayed by the company’s creditors, landlords and business partners.”