NEW YORK (AP) — FAO Inc., which owns the upscale FAO Schwarz toy store chain made famous by Hollywood and holiday traditions, has sought bankruptcy protection as less pricey rivals continue to lure away customers.
The retailer, based in King of Prussia, Pa., said its Chapter 11 filing won't affect business at FAO Schwarz stores — including the storied flagship location on New York's Fifth Avenue — or at its Zany Brainy and The Right Start chains.
The company said Monday it plans to close up to 80 stores by March. A company spokesman said the bulk of closings will be within Zany Brainy.
Along with Monday's filing in the U.S. Bankruptcy Court in Wilmington, Del., the company said it has agreed on a plan with its banks to fund its ongoing operations while it begins restructuring. That agreement requires court approval.
The company said it expects to meet with major creditors and file a formal reorganization plan soon. It expects to leave bankruptcy in the second quarter.
Tourists worldwide flock to FAO Schwarz's flagship store, particularly during the holiday season, where a toy soldier greets them at the door. The store's image as a playland has been reinforced by movies such as "Big," which featured Tom Hanks and Robert Loggia playing "Chopsticks" on a giant piano keyboard.
Last month the company warned that it likely would file for bankruptcy protection without relaxed borrowing restrictions by its lender, Wells Fargo Retail Finance LLC.
FAO Schwarz was founded in 1862 by German immigrant Frederick August Otto Schwarz. The store has 23 stores nationwide.