KB Toys Expects to Exit Chapter 11 This Year

KB Toys Inc. said it expected to emerge from bankruptcy protection before the holiday shopping season without closing more stores or cutting more jobs under an agreement that would put the chain under control of a New York investment firm.

An affiliate of Prentice Capital Management would invest $20 million in the reorganized company and extend credit of as much as $25 million in exchange for 90% of the new entity’s private equity common stock and all of its preferred stock.

Privately held KB Toys said the reorganization plan submitted to the U.S. Bankruptcy Court in Delaware had been endorsed by a creditor committee.