KB Toys Files for Chapter 11 Bankruptcy

KB Toys has filed for Chapter 11 bankruptcy and plans to close up to 500 of its 1,300 stores. The mall-based toy store's announcement comes not long after FAO Inc., parent of FAO Schwarz, Zany Brainy and Right Start, filed for Chapter 11 for the second time in a year. The move could significantly diminish competition among mainstream toy sellers in the U.S.