L.A. Equity Firm to Buy Right Start Stores
FAO Inc. late Wednesday said a U.S. Bankruptcy Court judge approved the emergency sale of 34 Right Start infant toy stores to an affiliate of Los Angeles-based private equity firm Hancock Park Associates.
Terms were not disclosed.
Earlier in the day, liquidators for FAO said Judge Joel Rosenthal had rejected Hancock’s $6.25-million bid for the chain, sending Right Start into liquidation.
FAO said the emergency order approving the sale would be filed Monday. The company and its lawyers did not immediately return calls seeking further comment.
On Dec. 4, FAO filed for Chapter 11 bankruptcy protection for the second time this year. The King of Prussia, Pa.-based company first sought protection from creditors in January and emerged three months later.
The specialty toy retailer cited dismal holiday sales in both bankruptcy filings. FAO’s second bankruptcy filing came at a time when low toy prices at discounters such as Wal-Mart Stores Inc. and Target Corp. and big toy retailers such as Toys R Us Inc. made it more difficult for smaller chains, including privately held KB Toys, to compete.
Hancock Park Associates was among the investors that bailed FAO out of bankruptcy protection the first time.
Jim Silver, publisher of Toy Wishes magazine, said earlier Wednesday that he understood that Hancock’s bid would have provided enough capital to run the unit for only about nine months.
Right Start sells infant toys and equipment such as playpens and car seats.
FAO, which also owns the upscale FAO Schwarz toy stores, initially said it had until Dec. 15 to sell the FAO Schwarz and Right Start units or face liquidation. But the deadline was extended. Its Zany Brainy educational toy chain went straight to liquidation.
Store-closing sales are continuing at FAO Schwarz locations, including its flagship Fifth Avenue shop across from the Plaza Hotel, while the company seeks a buyer for some of those stores. Last week, FAO said it was considering offers for some assets.
FAO shares were unchanged at 10 cents over the counter Wednesday.
