The announcement came after a federal bankruptcy judge in Delaware approved the retailer's reorganization plan. The emergence gives the company, which operates 640 stores, most of them mall-based, the chance to ramp up its offerings for the busy holiday season.
The privately held company has been in Chapter 11 since Jan. 14, 2004 following a dismal holiday sales season. After that filing, the company, which was formerly controlled by Bain Capital LLC, a Boston-based private investment firm, closed almost 600 stores as part of its reorganization.
The firm's new majority owner, PKBT Funding LLC, selected Gregory Staley, a former president of Toys "R" Us, to serve as chief executive and president of the reorganized company. Roger Goddu, also a former president of Toys "R" Us USA and the former CEO of Montgomery Ward, was named director and consultant.
PKBT Funding is an affiliate of Prentice Capital Management, a private-equity firm specializing in strategic investments in the consumer and retail sectors. According to a reorganization plan filed in federal court earlier this year, Prentice Capital Management, which is controlled by hedge fund investor Michael Zimmerman, supplied a $25-million loan to the company and paid $20 million for a 90% ownership stake in the toy retailer.
"KB Toys offers a terrific opportunity--it has a dedicated group of employees, a solid lease portfolio and great relationships with its vendors," Jonathan Duskin, a managing director of Prentice Capital and a director of KB Toys, said in a statement that also praised Staley and Goddu's expertise.
KB Toys and other toy retailers have been struggling recently as big-box discounters such as Wal-Mart snatch up business, forcing price wars that drove FAO Inc., the parent company of toy retailer FAO Schwartz, into bankruptcy.
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