Hechinger Files in Bankruptcy Court

Hechinger Co., a home-improvement retailer founded in 1919, filed for bankruptcy court protection from creditors Friday after suffering years of losses and being supplanted by larger rivals Home Depot Inc. and Lowe’s Cos.

The closely held chain, controlled by Los Angeles investment group Leonard Green & Partners, said it would shut 89 stores to focus on 117 healthier outlets in 21 states. The Largo, Md.-based retailer also plans to convert its remaining 16 Builders Square stores to the Home Quarters format, which is similar to Home Depot stores. Hechinger acquired the Builders Square chain from Kmart Corp. in 1997.

In response to the bankruptcy filing, Kmart said it would take a $230-million charge against second-quarter earnings to cover its exposure to Builders Square stores it once owned.

Kmart now sublets space to Hechinger for Builders Square stores and guarantees the leases.

Hechinger listed $1.32 billion in assets and $1.39 billion in debts in its Chapter 11 petition at U.S. Bankruptcy Court in Wilmington, Del.

Leonard Green acquired Hechinger in 1997 for $100.2 million.