eToys to File For Bankruptcy
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In the wake of a long-running, unsuccessful search for new capital, eToys Inc. Monday said it plans to file for bankruptcy protection in the next five to 10 days.
The company said its has enough cash to maintain operations through March 31 at the latest. eToys said it expects to close the eToys.com Web site around March 8 and will then focus its efforts on winding down its business and liquidating its assets.
eToys said it made its decision after concluding that its outstanding liabilities -- which amounted to about $274 million as of Jan. 1 -- would far exceed any proceeds or assets received through a strategic transaction. The company also said its outstanding equity securities, including its common stock and Series D preferred stock, have no value. Additionally, eToys has been notified by Nasdaq that it no longer meets the minimum net tangible assets requirement for The Nasdaq National Market.
"The company does not believe that it will be able to regain compliance with this requirement and has notified Nasdaq of this fact," the company said Monday. "Accordingly, the company anticipates that its common stock will be delisted from trading in the very near term, certainly sooner than the previously expected date of May 2, 2001."
Once the bankruptcy filing was authorized, three of eToys' directors -- Tony Hung, Michael Moritz and Dan Nova -- resigned from the board, leaving Chairman and Chief Executive Officer Edward C. Lenk and Peter Hart.
The once dominant online toy store gave notice to its remaining 293 employees earlier this month. The termination date is April 6.
shares ended the day trading at around 9 cents per share, off its 52-week high of $19.93.