Consumerist
Home goods retailer Linens 'N Things is expected to file for Chapter 11 bankruptcy protection on Tuesday. The company has hired "well-known restructuring firm" Conway Del Genio Gries & Company, and all signs point to dark days ahead, says the NYT:
If, as the market price implies, Linens 'n Things noteholders expect to recover just one-third of face value on their debt, woe to the equity holders, Apollo Management, National Realty & Development Corporation and Silver Point Capital. Their stock is almost sure to be wiped out.Holding a gift certificate makes you an unsecured creditor in the eyes of a bankruptcy court, and as such you're pretty low on the pecking order when it comes to divvying up the money. Today might be a good day to do some shopping.Under the terms of its senior notes, Linens 'n Things continues to make regulatory filings like a public company. So we can see exactly how much is at stake: The buyout group supplied $648 million of their own equity — or, more precisely, their funds' equity — to take Linens 'n Things private two years sago. That is about half of the deal's overall price of $1.3 billion.
And unless we are missing something, it appears that they haven't yet recouped any of that cash in the form of a special distribution or dividend (a favorite trick in the buyout world).
Linens 'n Things: Don't Expect a Soft Landing [NYT]
(Photo:Maulleigh)
