In a statement, Linens Holding Co., the parent company, alsosaid it was in discussions with an ad hoc committee of holders ofthe notes regarding a restructuring of its capital structure andsaid the lenders were "supportive." Two days later, it announcedthat it had retained the New York City-based investment bankingfirm of Financo Inc., adding it to Conway, Del Genio, Gries &Co., LLC, which had previously been retained as financialadvisor.

"We are committed to exploring all reasonable avenues in ourefforts to strengthen the company and to adopt a financial solutionthat recognizes the inherent value of the Linens 'n Things'business," says Robert J. DiNicola, chairman and CEO, in astatement. In a published financial update, DiNicola cited "theincreasing deterioration of the credit markets and the residentialreal estate meltdown, both stemming from the turmoil in thesubprime mortgage market, and the resulting downturn in consumerspending, especially in the home sector," which combined to create"acute financial challenges."

Beyond that, he also referred to "the rapidly increasingfinancial storm outside the company (that), together with ouroperating results, have accelerated credit and insurance problemsfor our vendors, causing them to recently begin imposingsignificantly more restrictive payment terms."