KB Toys, which filed yesterday for Chapter 11 bankruptcy protection, won bankruptcy court permission today to keep paying employees while the chain holds going-out-of-business sales at its 431 stores to raise money to pay creditors, Bloomberg News reported.
The 86-year-old company said in its initial Bankruptcy Court filing in Delaware that its debt is "directly attributable to a sudden and sharp decline in consumer sales" because of the poor economy.
The Pittsfield, Mass.-based company, said in the filing that it had about $480 million in annual sales, as well as debts of $100 million to $500 million and total assets in the same range.
The company filed for bankruptcy in 2004 and emerged nearly two years later as a subsidiary of investment firm Prentice Capital Management, which owns 90 percent of KB's common stock.
Bloomberg reported that U.S. Bankruptcy Judge Kevin Carey approved the company's request to continue paying its 4,400 full-time employees and 6,500 holiday workers.