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EToys Files for Bankruptcy and Closes Web Site
By Gary Gentile   Associated Press
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LOS ANGELES — Troubled Internet retailer eToys filed for bankruptcy Wednesday and shut down its Web site.

A message on the company's Web site informed visitors it is no longer accepting new orders but will fulfill existing ones. "It's been our sincere pleasure serving you," the message said.

The online toy seller's stock, which was last valued on the Nasdaq Stock Market at 9 cents per share before trading was halted last week, will officially be delisted Thursday.

EToys filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Wilmington, Del., where the company is incorporated.

In its filing, the company said that as of Dec. 31, it had assets of $416.9 million and debts of $285 million.

Company spokesman Ken Ross said Wednesday that debts now far exceed assets on hand. He said the company has used some of that cash for ongoing expenses and has sold much of its inventory.

In a release Wednesday, the company said it had liabilities of $274 million as of Jan. 31 and that its liabilities would exceed any potential proceeds from selling its assets.

Last week, the company sold its BabyCenter Inc. business to Johnson & Johnson for $10 million.

In its filing, the company said it's largest creditor was a South Carolina employment agency owed $2.46 million. It said it owed a similar amount to a Los Angeles media buying firm.

EToys said it also owes United Parcel Service Inc. $1.5 million and Hasbro Inc. $1.3 million. Other creditors include battery-maker Rayovac Corp., Sega of America, Fisher Price brands and computer game maker Electronic Arts.

Since the company announced on Feb. 26 that it would seek bankruptcy protection, it has been liquidating its inventory of toys and games, offering most products at discounts of up to 75 percent.

Last December, the company stunned Wall Street analysts when it said sales would be about half of what was expected. In January, the company laid off more than half its staff. In February, it sent layoff notices to its remaining workers and said it had only enough cash to stay open until the end of March.

The company said it will end all operations by April 6.

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