WILMINGTON, Del. (Dow Jones/AP) — KB Toys Inc. Wednesday won approval to take bids from liquidators as it prepares to close 400 to 500 of its stores in a Chapter 11 reorganization.

A joint venture made up of Gordon Brothers Retail Partners LLC and the Great American Group will serve as stalking horse, or opening bidder, for the auction of liquidation rights scheduled for Jan. 27.

Great American stepped in after Hilco Merchant Resources LLC dropped out because of a conflict with work it is doing with another toy retailer.

Court papers filed in connection with the auction plan say the stalking horse bid is 42.15 percent of the total retail price of merchandise in the stores. The estimated inventory value ranges from $93 million to $122 million, depending on how many stores are put into liquidation.

KB Toys, of Pittsfield, Mass., has marked at least 300 stores for closing and may decide to run liquidation sales and close an additional 115, depending on whether landlords are willing to re-negotiate leases, court papers said.

U.S. Bankruptcy Judge Joel B. Rosenthal said Wednesday he would sign an order setting out rules for the liquidators auction.

The chain had 1,231 stores when it filed for Chapter 11 protection Jan. 14.