Retailer eToys will file for Chapter 11

The company had liabilities of $274 million as of Jan. 31 — a debt that was unlikely to be erased even if the company finds a buyer, eToys said in a statement.

EToys said it will close its Web site by March 8.

EToys also advised investors that its common and preferred stock was "worthless.'' The Nasdaq stock market halted trading of the stock yesterday after eToys said it would not be able to meet the minimum requirements needed to keep the stock listed. The stock was trading at 9 cents per share.

The company said three of its directors resigned effective yesterday. Two members, including chief executive officer Edward C. Lenk, remain, the company said.

Like many Internet companies, eToys was big on promise but short on results. The company lost money, but investors believed it could survive to become a major player despite competition from industry leader Toys R Us.

EToys was founded in 1997 by the Internet incubator Idealab.

The company saw its stock quadruple when it went public in May 1999. EToys raised $166 million in that initial offering and saw its stock hit a record high of $85.25 in October 1999.

In December, eToys suddenly warned it was in serious trouble. It blamed its woes on smaller-than-expected holiday sales over the Thanksgiving holiday and warned its third-quarter results would be worse than anticipated.

In January, the company announced extensive layoffs and said it was working with an investment bank to find a buyer or an investor.

Later that month, the company reported a net loss of $85.8 million in the third quarter, or 62 cents per share, compared with a loss of $75.5 million, or 63 cents per share, in the same period last year.

In February, the company said it would lay off its remaining employees and said it did not expect any investment in the company before it ran out of cash on March 31.

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