PITTSFIELD, Mass. ( KB Toys said it will cut 3,500 jobs, or about 29 percent of its work force, and close at least 375 stores after a bankruptcy judge approved the company's Chapter 11 reorganization plan.
The Pittsfield-based chain sought bankruptcy protection earlier this month, blaming the Christmas season's sharp price wars and increased competition from mega-retailers like Wal-Mart.
U.S. Bankruptcy Judge Joel Rosenthal approved the company's plans to liquidate up to 490 stores on Wednesday. However, the company said it may close fewer stores than that, depending on whether landlords are willing to re-negotiate leases.
KB will get 45 percent of the retail price of the merchandise, according to the agreement. The company, which has long specialized in shopping mall toy stores, said it planned to file its severance plans for workers separately.
Prior to the proposed reorganization, the privately held KB Toys had 4 percent to 5 percent of the U.S. toy business with 12,000 employees and 1,231 stores.