Struggling specialty retailer Linens ‘n Things has received preliminary approval for its recent bankruptcy filing from the United States Bankruptcy Court for the District of Delaware.
Judge Christopher Sontchi gave the retailer permission to access a $700 million Debtor-in-Possession financing package, pending a hearing on final approval set for later this month, the company said in a statement.
“[The] orders granted by the court will ensure the continued smooth operation of LNT’s business and stores going forward,” the company said. “The court also granted certain relief for the payment of existing creditors, including utilities, taxing authorities, various logistics and transportation providers, as well as payments for goods shipped by vendors prior to the bankruptcy filing, but not received by LNT until after the filing.”
Linens ‘n Things currently operates more than 500 stores throughout the United States and Canada. Following its bankruptcy filing last week, the retailer announced it would close around 120 stores.
The retailer also issued a statement promising to honor Linens ‘n Things gift cards in all its stores while going through bankruptcy restructuring.
Linens 'n Things earlier characterized the bankruptcy filing as a result of damaged housing and credit markets, saying it was "driven largely by the impact of the current economic downturn on the company’s operating performance."
"The significant deterioration in the mortgage, housing and credit markets and the resulting impact on the retail marketplace, particularly the home sector, has overwhelmed the operating and merchandising improvements that we have made over the past two years," said executive chairman Robert J. DiNicola in a statement.
Linens 'n Things was purchased by investment firm Apollo Management in 2006. Earlier this year, the company reported a year-end loss of $242.1 million.