The troubled internet retailer eToys yesterday announced that it
plans to file for protection under federal bankruptcy law within
approximately 5 to 10 days following its failure to find a rescuer.
The company is one of the highest profile dot.coms.
The company, which launched in October 1997, said its decision
was based on the results to date of its efforts to pursue strategic
alternatives and its conclusion that, under any scenario, its
outstanding liabilities, which totalled approximately $274 million
as of 31st January, will substantially exceed the value of any
proceeds or assets that may be received in a strategic transaction.
Accordingly, the company has determined that it has no alternative
other than to file for bankruptcy protection.
The company also said that, in light of these facts, it has
concluded that its shares “have no value” and are, in its opinion,
“worthless”.
In addition, the company said it has received a notice from
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 it has notified Nasdaq of this fact. Accordingly,
the company anticipates that its common stock will be de-listed
from trading in the very near term, certainly sooner than the
previously expected date of May 2, 2001.
EToys has given notice of termination to all employees. The
company anticipates that it will close the eToys.com web site on or
about 8th March and that, thereafter, the company will focus solely
on the winding down of its business and the liquidation of its
assets.
