Linens 'n Things asks court to extend deadline for plan to take effect

By Jennifer Lanning Drey

Portland, Ore., Aug. 28 - Linens Holding Co. asked the U.S. Bankruptcy Court for the District of Delaware to extend the date by which its plan of liquidation must go effective to Nov. 30 from Aug. 30, according to a Friday filing.

Linens said since the plan's approval in June, it has worked diligently to satisfy the conditions required for the plan to take effect, but the administrative solvency condition remains unsatisfied.

Linens said in order to satisfy the condition, it has begun adversary proceedings to recover hundreds of preferential transfers.

The company said it initially believe the proceeds from the preference actions coupled with a reduction in administrative and priority liability achieved from claims reconciliation and objection processes would result in sufficient funds to satisfy the condition by the effective date.

However, unforeseen circumstances have delayed the collection of proceeds from the preference actions and the claims reconciliation and objection processes, Linens said in the filing.

The company also said after further review of its books and records, it has identified many other preferential transfers.

If the court does not grant the extension, Linens said it would be forced to restart the plan solicitation and confirmation process or, more likely, convert the case to Chapter 7.

A hearing has been scheduled for Sept. 18.

Linens 'n Things, a Clifton, N.J., home furnishings specialty retailer, filed for bankruptcy on May 2, 2008. Its Chapter 11 case number is 08-10832.

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