As recent as 2004, KB Toys was the nation’s largest mall and internet-based toy retailer—with 1,300 stores in 50 states (plus Guam and Puerto Rico), over 20,000 employees and nearly $2billion in annual sales. Owned by Bain Capital and facing a liquidity crunch, KB Toys filed voluntary petitions for bankruptcy in 2004. With a new private-equity sponsor (Prentice Capital Management) and a new credit facility (General Electric), KB Toys emerged from bankruptcy in August 2005. The Company embarked on an aggressive turnaround period, through which the Company shed unproductive assets and focused on increasing margin (300bps improvement in one year). In 2008, the Company was on target for positive EBITDA until the late fall—when the credit crunch and a sudden and insurmountable dive in consumer spending combined to force a second Chapter 11 filing in December 2008. KB Toys, currently a Chapter 11 debtor, is in the process of liquidating its assets.