Children’s specialty retailer FAO Inc. said that the bankruptcy court overseeing its Chapter 11 proceedings has approved the first step toward its reorganization.
The U.S. Bankruptcy Court for the District of Delaware has approved the company’s disclosure statement, which allows FAO to solicit votes on the plan.
The hearing date for the court to consider final approval of FAO’s plan of reorganization is March 31.
FAO Inc., based in King of Prussia, PA, filed for bankruptcy protection on Jan 13 (DIRECT Newsline, Jan. 14 and 15). At that time, the parent of FAO Schwartz, The Right Start and Zany Brainy, said that it would continue operating those divisions, but planned to close about 70 under-performing stores.
Catalogs for each of the divisions would continue to mail the company said.
The company reported a net loss of $23.7 million for the third quarter of 2002, compared to a net loss of $9.9 million in the third quarter of 2001.
FAO Schwartz was bought was purchased by toy retailer Right Start Inc., for $55 million last year. Right Start changed its name to FAO Inc. It had purchased toy seller Zany Brainy Inc. out of bankruptcy in 2001 for $100 million.
