Here we go again.
That's what shareholders of
The troubled children's retailer Tuesday said it will file for Chapter 11 sometime this week, just nine months after emerging from the same form of bankruptcy court protection.
Trading of the company's shares was halted Tuesday morning. The stock closed at 90 cents Monday after a month-long spiral.
The company has been in talks with lenders after receiving default notices in early November, when it revealed it would not have enough liquidity for normal operations because of weak sales.
FAO emerged from Chapter 11 protection in April.
This time around, the company said it plans to sell its FAO Schwarz and Right Start units and to liquidate its Zany Brainy chain. The company added that if the sale of the two units is not completed by Dec. 15, its lenders might force an outright liquidation.
The company said common shareholders will receive no compensation and that it was taking steps to immediately delist its stock from Nasdaq.
FAO had a net loss of $18.8 million, or $4.05 a share, in its second quarter ended Aug. 2, compared to a loss of $18.2 million, or $8.01 a share, in the same quarter a year ago. The company had an operating loss of $56.7 million in the first half of 2003.
FAO is best known for its FAO Schwarz toys stores, especially the one in New York City.