On March 6, 2009, KB Toys, Inc. filed a motion with the bankruptcy court seeking authority to settle certain outstanding accounts receivable. According to the motion, KB Toys completed its going-out-of-business sales on February 8, 2009, but certain accounts receivable owing to KB Toys remain outstanding, primarily owing from KB Toys’ vendors on account of rebates, year-end allowances, markdown offsets, credits and overpayments.
KB Toys seeks the authority to offset, compromise or agree to accept less than the full amount of the accounts receivable in order to expedite the recovery of the amounts, subject to certain limits. Specifically, the motion seeks the authority to settle accounts receivable on the following grounds:
- Any accounts receivable claim with an “aggregate net outstanding balance on the Debtors’ books and records of $100,000 or less”: authority to settle without further notice to the court or any other party
- Any accounts receivable claim with an “aggregate net outstanding balance on the Debtors’ books and records of over $100,000″: authority to settle, subject to providing written notice of the principal terms of the proposed settlement to the U.S. Trustee, counsel to the Official Committee of Unsecured Creditors, and counsel to KB Toys’ prepetition secured lenders, who have seven days to file a written objection to the settlement
