UPDATE 2-Linens 'n Things to liquidate remaining stores
(Adds analyst comments about Bed, Bath & Beyond, outlook for other retailers)
NEW YORK, Oct 14 (Reuters) - Linens 'n Things, victim of a widespread credit crunch, will begin liquidating its remaining stores as early as Thursday, after the bankrupt home goods retailer failed to find a buyer that will keep the company in operation.
The Delaware bankruptcy court had planned to hold an auction of company assets on Tuesday, after a group of liquidators had made a preliminary $475 million offer. But no other qualified bids came in and the auction was canceled, according to court documents filed late on Monday.
The court is expected to approve the group's offer and liquidation sales are expected to begin on Oct. 16, said James Schaye, president and chief executive officer of Hudson Capital Partners, which is a member of the liquidator group.
CREDIT CRUNCH
Linens 'n Things, which initially struggled amid a housing slowdown and a decline in consumer discretionary spending, was finally taken down by a credit crisis that stymied possible buyers from obtaining credit to fund a purchase.
"If capital markets weren't so tight, I think this chain might possibly have survived," said Schaye. "There's just no financing to do these deals at all."
The company had filed for bankruptcy protection in May and has already closed more than 100 stores. It had been under pressure from its creditors to rush closing its remaining 371 stores, according to court documents.
As of Dec. 31, the company employed some 17,500 people and had a vendor base of about 1,000 suppliers, according to court documents. At that time, the company operated 589 stores in 47 states and seven Canadian provinces.
But the sharp decline in the housing market and a slump in consumer discretionary spending undermined the company's ability to pay its suppliers.
And though some investors were interested in buying the company, they were hindered by the lack of ability to borrow money, said Schaye.
"I actually thought there were going to be a couple of people who would (submit an offer) at the 11th hour, but they just didn't get there," said Schaye.
The group of liquidators that will oversee the closing sales include Gordon Brothers Retail Partners, Hilco Merchant Resources, Great American Group LLC, Hudson Capital, SB Capital Group LLC and Tiger Capital Group LLC.
The group offered 95 cents on the dollar, for about $500 million in inventory, valuing the bid at about $475 million, said Schaye.
He said he expects consumers to turn out in droves since it will be a rare chance to buy useful household merchandise, such as cooking supplies and bedding, for drastically reduced prices. Continued...
