Linens 'n Things Plans To Liquidate Stores

Clifton, NJ, Oct. 15, 2008--Home furnishings retailer Linens 'n Things, which filed for bankruptcy protection in May, canceled its auction and plans to begin liquidation sales at its stores as soon as tomorrow.

Linens Holding Co., the parent company, failed to find a bidder who wanted to continue operating the retail chain.

"The problem isn't that Linens 'n Things doesn't have value," said Marshal Cohen, chief industry analyst for the Port Washington-based market research firm NPD Group. "The problem is that the value is too difficult to purchase at this time. Credit is a major part of it and growth by acquisition is no longer the darling child that it was only six months ago."

The company had agreed to a $475-million "stalking-horse" bid for Linens 'n Things' assets from a joint venture of several investment groups specializing in liquidation. The retailer had hoped to court a buyer that would keep the retail chain running. It called off the auction, which was scheduled for yesterday, after it failed to draw any other qualified bids, court documents stated.

The investors buying the company's assets include Gordon Brothers Retail Partners Llc, Great American Group Llc, Hilco Merchant Resources Llc, Hudson Capital Partners Llc, SB Capital Group Llc and Tiger Capital Group Llc.

The going-out-of-business liquidation sales for about 371 remaining store locations are expected to take about 11 weeks, said James Schaye, president and chief executive of Hudson Capital Partners.

The retailer's failure to find a bidder to maintain the chain's operations reflects the tough competition as well as the challenges posed by a difficult economy all retailers now face, Cohen said.

"It used to be if you weren't growing, you weren't successful and it didn't matter whether you made money or not," Cohen said. "In 2009 it's about whether you turn a profit. It's about how well you manage your business and not how fast you're growing."