NEW YORK Home goods retailer Linens 'n Things has filed for Chapter 11 bankruptcy protection and plans to close 120 underperforming stores, the company said on Friday.
The struggling seller of textiles, housewares and other home goods also said it had secured $700 million in financing from General Electric Co's (GE.N) GE Capital affiliate to ensure it can stock its stores with merchandise for the back-to-school and holiday shopping seasons.
The company said Michael Gries had been appointed chief restructuring officer and interim chief executive.
Like many retailers of home-related goods -- including Bed Bath & Beyond Inc (BBBY.O) and Williams-Sonoma Inc (WSM.N) -- Linens 'n Things has struggled mightily in the wake of the U.S. housing bust and global credit crisis.
Executive Chairman Robert DiNicola said those issues "overwhelmed the operating and merchandising improvements that we have made over the past two years."
The company began a turnaround effort in 2006 aimed at improving marketing while reducing the array of items it sells but the strategy wilted in the wake of a weakening U.S. economy.
The company had been in negotiations with its creditors, including General Electric. The Chapter 11 filing allows Linen 'n Things to reorganize its finances while freeing the company from the threat of creditor lawsuits.
Linens 'n Things, which was bought by Leon Black's buyout firm Apollo Management in 2006, is among the largest companies taken private in the recent buyout boom to file for Chapter 11 bankruptcy protection.
As of December 29, Linens 'n Things' parent company Linens Holdings Co had $1.74 billion in total assets and $1.42 billion in liabilities, according to a filing with the U.S. Securities and Exchange Commission.
Linens 'n Things operated 589 stores in the United States and Canada as of December 29, 2007. The retailer said its Canadian segment is not among the units seeking protection from creditors.
The company had been in talks with a committee of its debt holders about altering its capital structure.
Linens 'n Things said last month it had delayed a $16 million interest payment and that its lenders had agreed to delay exercising their right to stop making loans to the company.
(Reporting by Justin Grant, editing by Mark Porter and Gerald E. McCormick)