eToys files for Chapter 11

The troubled Internet toy e-tailer files for Chapter 11 bankruptcy in Delaware and is expected to close its Web site.

Troubled Internet toy site eToys filed for Chapter 11 bankruptcy in Delaware on Wednesday and is expected to close its Web site by Thursday.

The move was expected after an announcement from the company in late February.

The company had also said it faced being delisted from the Nasdaq in the very near term.

These final steps of closure mark the end of one of the best-known e-commerce companies from the late 1990s Internet boom. Backed by respected venture capital firms Idealab, Highland Capital Partners and Sequoia Capital Partners, eToys launched its initial public offering May 1999, raising $166 million at a price of $20 per share. In October 1999, the stock hit a high of $84.25.

During the holiday season of 1999, eToys drew more customers than the Web sites of Toys "R" Us and Amazon.com, according to traffic figures from Jupiter Media Metrix.

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Riding the paper-wealth roller coaster
Kathy Hernandez, employee No. 5, eToys

Last December however, the company told Wall Street its revenues would fall dramatically short of expectations. At the time, it said it had begun looking into selling the company or its assets.

Last week, eToys sold its BabyCenter.com Web site to Johnson & Johnson for $10 million.