Linens 'n Things Canadian operating subsidiary files bankruptcy

By Caroline Salls

Pittsburgh, Oct. 20 - Linens Holding Co.'s Canadian operating subsidiary, Linens 'n Things Canada Corp., has filed for protection under the Canadian Bankruptcy and Insolvency Act, according to a company news release.

Linens Canada expects to appear before the court in Canada in the next week to seek approval to liquidate its Canadian business.

Linens said its Canadian subsidiaries were not part of its Chapter 11 bankruptcy filing made in the U.S. Bankruptcy Court for the District of Delaware on May 2.

According to the release, the filing in Canada follows bankruptcy approval of the sale of Linens' assets to a joint venture comprised of Gordon Brothers Retail Partners, LLC, Hilco Merchant Resources, LLC, SB Capital Group, LLC, Tiger Capital Group, LLC, Hudson Capital Group, LLC and Great American Group, LLC.

Under that agreement, the joint venture group will act as the agent for Linens to liquidate substantially all of its inventory through store closing sales at its remaining 371 U.S. locations.

If the Canadian court approves, the agreement will also include the company's 40 Canadian locations.

Linens said the store closing sales are expected to begin following approval by the Canadian court.

"Since our bankruptcy filing in the United States in early May, LNT and our advisors have worked tirelessly to develop a viable restructuring plan for the company," Linens' chief restructuring officer and interim chief executive officer Michael Gries said in the release.

"Unfortunately, the worsening economic situation in the U.S., the deepening decline in the real estate market, the further downturn in consumer spending and the frozen credit markets combined to make this sale of assets the best vehicle to satisfy our creditors.

"This is a difficult day, especially since our Canadian stores were among the best performing stores."

Linens, a Clifton, N.J., home furnishings specialty retailer, filed for bankruptcy on May 2. Its Chapter 11 case number is 08-10832.

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