KB Toys Inc. (Pittsfield, Mass.) has filed for Chapter 11 bankruptcy protection, saying that price wars and soft holiday sales could force it to close as many as 500 stores as it seeks to downsize into a smaller company.
The $1.5 billion, 1231-store toy company is the second in two months to declare bankruptcy. FAO Inc. (King of Prussia, Pa.) filed for bankruptcy last month for the second time in a year.
“We are confident KB Toys will emerge as a stronger and more competitive operation, well-positioned to respond to and succeed in the changing toy industry,” said ceo Michael Glazer.
According to court filings, KB listed $507 million in assets and $461 million in debts. Among KB's largest unsecured creditors is toy manufacturer Hasbro Inc. (Pawtucket, R.I.), which is owed $15.3 million. The filings said KB talked to five possible buyers, but there was no “acceptable offer.”