When one of the nations largest toy store chains files for bankruptcy two weeks before Christmas, you know the economy is bad.

But that’s just what is happening. Yesterday, the toy giant KB Toys filed for bankruptcy and announced that it would being to liquidate all of its 400+ stores in the United States. The company was founded back in 1922 and has stores in 44 U.S. states, Puerto Rico and Guam. The company employs about 11,000 people, including 6,500 seasonal workers they bring in during the holidays.

KB Toys Files for Bankruptcy
KB Toys Files for Bankruptcy

Prior to the filing, the toy retailer reported sharp declines in consumer spending. It has struggled in recent years to compete against big-box retailers like Walmart that sell many of the same items at lower prices. The holiday shopping season is an opportunity for the chain to liquidate much of its inventory at clearance prices.

For shopping looking for great deals on toys this year, KB might be the best place to go, especially if you have a gift card from them. Rumors are circulating that the gift cards will not be redeemable or refundable after the stores close. If you have one, make sure you spend the money on it in the next few weeks.

Though this is certainly a sign of the poor economy right now, this is not the first trip to bankruptcy court for KB Toys. In 2004, it filed for Chapter 11 protection but was able to retain approximately half of the 1,200 stores it once had. This time it looks like they will lose all of their remaining locations. KB Toys is not alone in this predicament. Several other major companies have filed for bankruptcy this year including Linens ‘n Things, Circuit City and Steven & Barry’s.