Linens 'n Things to liquidate remaining stores

A Linens 'n Things exclusive collection in an undated photo. The remaining Linens 'n Things stores will likely start liquidation sales as early as Thursday after the home goods retailer failed to find a buyer that will operate the company as a going concern.

NEW YORK (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 operate the company as a going concern.

The Delaware bankruptcy court had planned to hold an auction for interested bidders on Tuesday, after a group of liquidators that included Hilco Merchant Resources had made a preliminary $475 million offer. But no other buyers submitted qualified bids and the auction was canceled, according to court documents filed late on Monday.

The court is expected to approve the stalking horse bidder's offer and liquidation sales are expected to begin on October 16, said James Schaye, president and chief executive officer of Hudson Capital Partners, which is a member of the liquidator group.

The retailer, which initially struggled amid a housing slowdown and a decline in consumer discretionary spending, was finally taken down by a credit crisis that prevented possible buyers from getting the 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 December 31, the company was one of the largest purchasers of home furnishings in the United States, employed some 17,500 people and had a vendor base of about 1,000 suppliers, according to court documents. At that time, the company was operating 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, 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 expected 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.

The stores should be completely closed in less than 11 weeks, by January 1, at the latest, he said.

Shares of Bed Bath & Beyond Inc (BBBY.O), the company's main competitor, were down 19 cents at $27.51 in early trading on Nasdaq.

(Reporting by Chelsea Emery, editing by Dave Zimmerman)