KB Toys' unsecured creditors seek extension to injunction against Big Lots lawsuit

By Caroline Salls

Pittsburgh, July 5 - KB Toys, Inc.'s official committee of unsecured creditors requested an extension to its preliminary injunction against Big Lots Stores, Inc., keeping the latter from continuing its legal action against KB Toys until confirmation of its plan of reorganization, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee wants to extend the injunction for five to six weeks. The injunction currently expires on July 15.

Big Lots has filed a case against some of KB Toys shareholders and current and former officers in the Chancery Court of the State of Delaware.

The committee said the injunction is necessary to avoid "irreparable harm" to the company and its employees that would occur if the case proceeds prior to plan confirmation.

"To allow the Big Lots action to proceed at this critical juncture would divert the necessary time, energy and resources away from reorganization and confirmation efforts," the committee said in the filing.

According to the motion, the committee said the deadline was originally set to coincide with the company's deadline to solicit votes on its plan of reorganization, which was filed on May 13.

However, the company will not be able to complete the solicitation by that date because a plan-related auction and disclosure statement approval hearing are scheduled for July 14 and a hearing on voting procedures for the plan is scheduled for July 26.

KB Toys has also filed a motion requesting an extension to its exclusive period to solicit votes to Sept. 1 from July 15, according to the filing.

A hearing on the injunction extension is scheduled for July 26.

The Pittsfield, Mass.-based toy retailer filed for bankruptcy on Jan. 14, 2004. Its Chapter 11 case number is 04-10120.

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