eToys Files Chapter 11
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Once a Wall Street darling with a market capitalization of about $10 billion, Santa Monica, Calif.-based eToys has made its demise official, filing for protection from its creditors in U.S. Bankruptcy Court in Delaware.
The Web site -- where a fire sale (up to 75 percent off) has been going on for some time -- was still functioning this morning, but is expected to be shut down some time tomorrow.
eToys, which sold its BabyCenter Inc. operation last week to health products giant Johnson & Johnson for $10 million, was unable to find a white knight of any kind, be it buyer or investor. The company had hired Goldman, Sachs last January to find an angel, but none was forthcoming.
In its bankruptcy filing, eToys, listed $416.9 million in assets and $285 million in debts, according to published reports. The move came as no surprise; eToys said on Feb. 26 that it would file for bankruptcy in five to 10 days.
At that time, the company also said its outstanding equity securities, including its common stock and Series D preferred stock, have no value and that its stock was being delisted by Nasdaq. The company gave notice to its last remaining employees in February.
At their height in 1999, eToys shares were worth more than $80.
The company ran into trouble during the holiday sales season of 1999, when it was unable to make many deliveries on time. Determined to have a better Christmas in 2000, the company poured money into a new warehouse facility and took delivery in-house. But the bet never paid off and as sales faltered, the company went into a death spiral.