KB Toys, creditors' settlement with lenders granted court approval

By Lisa Kerner

Charlotte, N.C., Dec. 1 - KB Toys, Inc. and its official committee of unsecured creditors had their settlement with lenders PKBT Lending LLC, PKBT Funding LLC and Prentice Capital Management, LP approved, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The court also approved all distribution and dismissal procedures.

As previously reported, terms outlined in the original motion include:

• $700,000 of the cash proceeds from the asset sales will be used to make distributions to claimholders;

• The prepetition second-lien agent waives any claim against the company's estates with respect to cash retained by the company;

• The prepetition second-lien lenders are not liable to fund any of the company's obligations;

• The committee waives any claims against the Prentice entities, the prepetition collateral and the allowed prepetition second-lien lenders' claim of $105.57 million;

• The prepetition second-lien lenders agree to withdraw fee objections on the effective date; and

• The final cash collateral order will be extended to Jan. 31.

KB Toys, a Pittsfield, Mass., mall-based toy retailer, filed for bankruptcy on Dec. 11, 2008. Its Chapter 11 case number is 08-13269.

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