Linens 'n Things files Chapter 11, to close 120 stores

Home furnishings retailer Linens 'N Things filed for Chapter 11 bankruptcy protection Friday and said it will close 120 underperforming stores as part of its restructuring, including its store in North Natomas and 26 other California locations.

Clifton, N.J.-based Linens Holding Co., parent of the chain, said the Chapter 11 filing was largely the result of the economic downturn.

"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 Robert J. DiNicola, Linens Holding executive chairman, in a release. "We are making the strategic decision to use a Chapter 11 filing to proactively address our capital structure and ensure that our stores will remain well stocked while we work through the steps to align the capital structure of the company with the realities of today's business environment."

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Linens 'n Things logged $2.8 billion in sales in 2007. It operates 589 stores in 47 U.S. states and seven Canadian provinces. In addition to the store in The Promenade at Sacramento Gateway in Natomas that will be shuttered, the chain has Greater Sacramento stores in Folsom, Elk Grove, Citrus Heights, Roseville and in Sacramento near Arden Fair mall.

The company's Canadian stores, which are among the strongest performers in the chain, are not included in the filing and there are no plans for a bankruptcy filing in Canada, Linens Holding said.

The company has secured $700 million in debtor-in-possession financing from General Electric Capital Corp., which Linens Holding said will ensure healthy merchandise flow as it gets ready for the back-to-school and holiday selling seasons.