FAO Receives an Offer for Its Fifth Avenue Toy Store
FAO Inc., which sought bankruptcy protection for a second time this year, received an offer Tuesday for its flagship FAO Schwarz toy store on New York’s Fifth Avenue as liquidators prepare to sell off the company’s assets.
The proposal also covers the FAO Schwarz name, said David Levene, an attorney for the retailer, which is based in King of Prussia, Pa. He declined to comment further on the offer.
“We are waiting for the buyer to send us a draft contract for us to review,” Levene said. “The price and terms have been spelled out. They are working on it right now as we speak. It’s a substantial offer.”
FAO plans to shut its 38 Right Start and 15 FAO Schwarz stores if a suitor isn’t found. A deadline was extended to today.
Los Angeles-based private equity firm Hancock Park is expected to proceed with its $6.25-million bid for the chain’s Right Start stores, which sell infant and toddler toys.
Hancock was part of an investment group that bailed out FAO during its first bankruptcy and prevented the company from shutting all of its stores, including the FAO Schwarz chain.
An auction for Right Start is expected to take place Tuesday.
George Hawley, an attorney representing Hancock Park, and FAO Chief Executive Jerry Welch could not be reached for comment.
Earlier Tuesday at a Bankruptcy Court hearing in Boston, a judge denied a $200,000 breakup fee sought by Hancock Park after it was disclosed that firm principal Brian McDermott also served on FAO’s board.
FAO filed for protection from creditors this month in the face of stiff competition from lower-priced retailers. The company is closing its 89 Zany Brainy stores.
