News > Companies
EToys files for bankruptcy
February 26, 2001: 5:58 p.m. ET

Troubled online toy seller to be delisted, lay off staff, and shut its Web site
graphic graphic
NEW YORK (CNNfn) - Troubled online toy seller eToys Inc. announced Monday that it will file for federal bankruptcy protection in five-to-10 days, and plans to close its Web site as well as lay off its employees.

Citing debt of $247 million, Los Angeles-based eToys (ETYS: Research, Estimates) said it had no alternative but to file for federal bankruptcy protection. Etoys, which has hired Goldman Sachs to explore strategic alternatives, said that its outstanding liability will exceed the value of any proceeds or any transaction it may enter. Etoys also concluded that its stock has no value and warned potential investors that its shares were "worthless."

graphicThe online retailer has failed to meet minimum requirements needed for listing on the Nasdaq. Etoys, whose shares has fallen below $1, must maintain a minimum bid price of $1 for 30 consecutive trading days to be listed on the Nasdaq.

The online retailer expects to be delisted from Nasdaq trading sooner than the expected May 2 date.

In January, the Web retailer said it had enough cash and cash equivalents to last until March 31, but after that it will require "an additional, substantial capital infusion."

The Web toy retailer, which has sought a buyer, reiterated Monday that it has only enough cash to continue operations until March 31 and is providing elimination notices to employees extending up to April 6. Etoys now plans to shut its Web site on or about March 8 and will thereafter wind down its business and focus on liquidation.

In January, eToys reported a loss of $74.5 million on $131.2 million in sales, but said it has only enough cash to keep its business going until the end of March. On Feb. 5, eToys cut 293 employees in its Ontario, Calif., and Blairs, Va., distribution centers, on top of the 700 personnel already laid off.

Shares for eToys fell 3 cents to close at 9 cents Monday. graphic