The story
Beginnings and early expansion
Child World was founded by Joseph Arnesano & Sid Schneider in Quincy, Massachusetts in 1962. It became a publicly-traded corporation in 1968, based in Avon, Massachusetts.
It acquired Children's Palace from Kobacker Stores in 1975. Post merger, Child World began incorporating the Children's Palace stylized castle decor into its new stores.
In 1981, Child World was purchased by Ohio businessman Joseph E. Cole's Cole National Corporation; it came under the ownership of Kohlberg Kravis Roberts following its 1984 purchase of Cole's firm.
Downfall
Cole National began restricting the amount of money it provided to the subsidiary causing cash shortages. Vendors including LEGO refused to extend credit which left stores with empty shelves. Meanwhile Toys "R" Us continued to grow and Child World had to defend a lawsuit from the Consumer Product Safety Commission.
Child World ended 1990 with US$830 million in assets but US$1 billion in liabilities. Cole National sought to sell the ailing chain. A US$157 million deal fell through and there were no other buyers. In 1991, it emerged senior executive James Maybury had been diverting revenue to fund a museum he intended to open in Dracut, MA. Cole National had to perform a debt trade with fellow venture capital firm Avon Investment Limited Partnership later that year in order to shed the business. Avon appointed former Toys "R" Us executives, but results remained poor and in early 1992 Child World closed 26 stores.
Bankruptcy, failed merger, and liquidation
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In April 1992, Child World applied for Chapter 11 bankruptcy protection causing former Child World managers and Cole National executives to file a class-action lawsuit against Avon, accusing it of sabotaging the company so they could liquidate it and avoid payments to them. A further 54 stores were identified for closure as Child World focussed on 71 previously profitable Northeastern United States stores it sought funds to keep open. Lenders were not forthcoming and the business reported further losses. Avon sought a last ditch merger of Child World with Lionel Corporation's also financially troubled Lionel Kiddie City, while beginning a massive clearance sale to try to raise cash. The merger talks proved fruitless, and Child World began liquidation sales in the summer of 1992 while terminating many of its executives. The last Child World locations closed in September of that year.
From Wikipedia’s article on Child World, shared under CC BY-SA 4.0.3