KB Toys will honor New Yorkers' gift cards

NEW YORK (Reuters) - KB Toys Inc, which has filed for bankruptcy, has pledged to honor New Yorkers' gift cards through the holidays, New York State Attorney General Andrew Cuomo said on Tuesday .

Gift cards will be honored at least through January 11 under an agreement with Cuomo.

The mall-based toy retailer, which filed for Chapter 11 protection from creditors for the second time in four years on December 11, began liquidation sales at its 461 stores earlier this week after a Delaware bankruptcy court approved the plan.

While the court authorized it to honor gift cards, it did not require KB Toys to do so, Cuomo's office said in a statement.

Cuomo stepped in to ensure that New York consumers with KB Toys gift cards can use the cards and any merchandise credit through the holidays and in the immediate post-holiday period, his office said.

KB Toys sold as much as $2 million in gift cards this year and holds $12 million in unredeemed gift cards currently, the statement said.

The gift cards will be honored at stores but not online.

KB Toys has committed to notify Cuomo, and to post signs in stores, at least 10 days prior to any decision to stop honoring New York consumers' gift cards.

(Reporting by Aarthi Sivaraman; editing by John Wallace)