EToys to Cease Operations

EToys Inc. will file for protection under federal bankruptcy law within the next two weeks, following its inability to secure a merger or acquisition deal. The company will shut down its Web site on or about Mar. 8, and has provided job elimination notices to its employees, with termination dates ranging through Apr. 6.

EToys¹ outstanding liabilities, which total $274 million, would substantially exceed the value of any proceeds or assets it would gain through a strategic transaction, the company said in a statement.

Three of the company¹s directors, Tony Hung, Michael Moritz and Dan Nova, resigned from its board following the decision to enter into bankruptcy. The two remaining directors include Peter Hart and chairman and CEO Edward C. Lenk.

The Nasdaq Stock Market halted trading of eToys stock yesterday, changing its status to "additional information requested." The last sale price of its stock was 3/32. Trading of eToys stock will remain suspended until eToys has satisfied the information request.