BANKRUPTCY UNLIKELY TO BREAK ZANY BRAINY TOYS.

Byline: Patricia Farrell Aidem Staff Writer

VALENCIA - Zany Brainy toy stores, with an outlet on Town Center Drive, filed for bankruptcy earlier this month - the second anchor on the entertainment-retail strip to seek financial reorganization.

The educational toy chain joins Edwards Cinemas, with two multiplexes at the Valencia Town Center, in seeking protection under Chapter 11 while revamping operations to cut costs.

Shopping center officials and the owner, The Newhall Land and Farming Company, dismissed the filing as a routine part of the retail industry and predicted that the local store would continue operating.

Tom Vellios, president and chief executive of Zany Brainy, told The Associated Press he did not know what the reorganization plan would involve or whether the chain would close any stores.

Vellios blamed the chain's rapid expansion, including the opening of 27 new stores, the softening economy, and the absence of a ``hot'' product for the financial problems.

A filing under Chapter 11 of U.S. bankruptcy laws typically gives companies a chance to keep operating while they develop a financial reorganization plan.

Town Center General Manager Charles Gill said he hasn't spoken with Zany Brainy officials since the bankruptcy filing was announced.

``It's unfortunate that this seems to be a business strategy for some retailers - they file, they reorganize,'' Gill said. ``But I don't see any effect here. It's a good store, it performs well.''

While Zany Brainy, one of the largest retailers on Town Center Drive, decides how to cuts costs, Edwards Cinemas, with 22 theaters there, is expected to stay in business.

Edwards spokeswoman Anita Marie Hill said the Newport Beach-based theater chain has closed about 20 low-performing theaters since August, but noted that the Valencia theaters are doing well. She didn't say whether either local theater would close to help the company stay in the black.

``It's a tough time right now,'' Hill said.

Newhall Land spokeswoman Marlee Lauffer said the two multiplexes account for about 18 percent of the mall's total income, though the parent company's financial straits cost Newhall Land the sale of the mall last year.

Still, the retail center is doing well, she said, but customers will see some turnover in coming months.

``On the whole, it's a normal part of the process,'' Lauffer said.

The Twin Palms restaurant on Town Center Drive closed late last year, and a new tenant is expected to sign next week, Gill said.

Lechter's kitchen supplies was seeking a new lease deal while contemplating a Chapter 11 filing, and has closed, Gill said. Garden Botanika, a bath supply outlet, filed under Chapter 11 and closed its local store. Natural Wonders is seeking reorganization, but hasn't decided the fate of its Valencia store, Gill said.

Overall, first-quarter sales were up 12 percent at the Town Center compared with the same period last year, Gill added.