Tale of Two Chapters: 7 for Planet Toys; 11 for Station Casinos

Toymaker reported to be aiming for liquidation, while gaming concern eyes a prepackaged bankruptcy reorganization.
Stephen Taub and Roy HarrisMarch 19, 2009

As reports of financially suffering companies proliferate, Planet Toys Inc. became the latest consumer-oriented company to file for bankruptcy protection. Earlier this week, Station Casinos Inc. was reported to be preparing a filing for a prepackaged Chapter 11 reorganization.

The toy company has filed in New York for a Chapter 7 bankruptcy petition, which typically provides for a liquidation, according to Reuters.

The company had been sued last year by the nonprofit Asbestos Disease Awareness Organization, which alleged there was dangerous asbestos in toy crime-scene kits — based on the hit CBS series “CSI: Crime Scene Investigation” — that the company sold. Planet Toys pulled the kits from the market. Reuters noted that the company also is facing a potential class action lawsuit over the kits.

Planet Toys reportedly said in its bankruptcy petition that it had assets between $1 million and $10 million and liabilities between $10 million and $50 million.

Meanwhile, Station Casinos was planning to file its prepackaged bankruptcy plan by April 15, according to press reports, including one in the Las Vegas Sun. On Wednesday, that paper said, executives moved to clarify when the company may file for bankruptcy protection, saying there was no assurance the filing would come on or before April 15.

Scott Nielson, executive vice president and chief development officer, said that if an agreement was not reached with bondholders by an April 10 deadline, a forbearance agreement now in affect through April 15 could be extended so negotiations could continue, the paper reported. If the forbearance agreement is extended, Station has sufficient cash and cash flows to maintain operations after April 15, he said.

An option not favored by Station Casinos, however, would be for the company to make a regular Chapter 11 filing, according to the report. The prepackaged bankruptcy, by contrast, would leave the company’s operations running normally with little or no affect on customers, employees and vendors, the paper quoted Nielson as saying.

The casino company said in a regulatory filing that it had elected not to make a scheduled $9.9 million interest payment, due on March 15, to holders of the company’s $300 million, 6-5/8-percent senior subordinated notes, due 2018. The grace period ends on April 14. Earlier this month Station Casinos had said that it elected not to make a scheduled $24.1 million interest payment that was due on March 1, 2009 to holders of the company’s $700 million 6-7/8-percent senior subordinated notes, due 2016.  The grace period for that interest payment ends on March 31.
In bankruptcy news from Foamex International Inc., a producer of polyurethane foam products, said the U.S. Bankruptcy Court for the District of Delaware had granted final approval for up to $95 million in debtor-in-possession financing provided by MatlinPatterson Global Opportunities Partners III L.P. and Bank of America. “The final approval we received from the court for the full $95 million in DIP financing is a key step forward as we restructure our debt and position Foamex for a stable future,” said Jack Johnson, Foamex president and CEO. “The DIP financing, coupled with cash flow from operations gives the company the financial flexibility to maintain normal operations and continue to provide our customers with innovative products and solutions without interruption.”