FAO Inc., the parent company of legendary toy retailer FAO Schwartz, emerged from Chapter 11 bankruptcy only 100 days after filing, a remarkable achievement considering the situation the organization found itself in less than three months ago.  To extricate itself the company sold $30 million worth of preferred stock to a group of investors and also secured $77 million in bank financing.  FAO displayed considerable brinksmanship by getting court approval to hold an auction of the company's assets on Tuesday, April 22 (see 'FAO Schwartz Exit From Bankruptcy Back On Track'), a strategy the company adopted when several of the exit lenders and equity investors indicated that they might back out of the deal.  The issuance of the preferred stock and other aspects of the reorganization will mean that the company's original stockholders will retain about 9.3% of the company's equity.

The next task for FAO Inc., which also owns the Zany Brainy and The Right Start chains in addition to the FAO Schwartz stores, is to rebuild inventory in its stores, since the focus of the company has been liquidating inventory since it filed for bankruptcy back in January.