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Online education company Edmentum Inc. is out of compliance with its loan agreement and is looking for a waiver from lenders to keep it from defaulting, Dow Jones Daily Bankruptcy Review reported yesterday. According to Moody's Investor Services, the closely held company is currently operating under a forbearance agreement with its lenders and didn't meet a requirement to keep its leverage ratio under a certain level. If Edmentum doesn't obtain a waiver for the leverage requirement, it could potentially be in default on its loan. Edmentum didn't meet expectations this year, Moody's said, adding that the company has a "weak liquidity profile, small scale, high leverage, modest coverage of interest expense, and balance sheet debt that is well in excess of revenue."

Hedge fund Standard General has raised its bid to buy about 1,740 stores of bankrupt electronics retailer RadioShack Corp. in a court-supervised auction, which entered its second day yesterday, Reuters reported. Standard General, which would operate most of the stores in conjunction with Sprint Corp., increased its initial $145 million bid by at least $20 million, according to one of the sources. It also committed to keeping some 7,500 RadioShack jobs. Liquidators who proposed closing the stores and selling the inventory and fixtures also made a bid. The result of the private auction, taking place at the New York offices of the Jones Day law firm, must be approved by the U.S. Bankruptcy Court in Wilmington, Delaware. A hearing has been scheduled for Thursday at 9:30 a.m.

Karmaloop Inc., an online apparel company, filed for bankruptcy protection, becoming the latest clothing retailer to fall victim to changes in consumer trends, Bloomberg News reported yesterday. The Boston-based company listed assets of more than $10 million and debt of more than $100 million in chapter 11 documents filed yesterday. “The debtors’ businesses have fallen victim to the shift in retail purchasing that is occurring, especially among retailers in the young adult age bracket, as such consumers have moved away from purchasing traditional brands,” Brian L. Davies Jr., the interim chief financial officer, said in court papers. The company will seek court permission to sell assets and named ComCap Acquisition LLC, an affiliate of one or more pre-bankruptcy lenders, as lead bidder at a court supervised auction.

Restructuring lawyer Richard Davis will likely lead an investigation into transactions by the operating unit of Caesars Entertainment Corp., which filed for chapter 11 this year, Reuters reported yesterday. The Executive Office for U.S. Trustees recommended Davis as the examiner in the case, asking a judge to consider approval of the pick at a hearing on Wednesday. Davis, a former partner at bankruptcy powerhouse Weil Gotshal & Manges, has served in several investigative roles both in and out of bankruptcy. Most recently he was tasked with probing the dealings of bankrupt hedge fund Fletcher International, whose founder, Alphonse "Buddy" Fletcher, is the husband of Ellen Pao, the plaintiff in a high-profile gender discrimination lawsuit against venture capital firm Kleiner Perkins Caufield & Byers. Caesars Entertainment Operating Co. filed for bankruptcy in January to cut its debt by $10 billion. Prior to filing, it transferred a number of its most valuable properties to affiliates of its parent as it struggled to overhaul operations. Creditors have alleged the moves were illegal efforts by the parent to place the assets beyond the reach of creditors.

The RadioShack auction moves into a second day today in New York, as the company and its creditors debate the value of the bid from big lender Standard General LP, the Wall Street Journal reported today. Standard General’s takeover proposal would keep the iconic retailer in operation, in trimmed-down form, and estimates are that it’s worth at least $20 million more than a potential counterbid from a joint venture of liquidators. The problem for RadioShack is that Standard General is bidding mostly by offering to cancel loans it made to the company, and creditors have questioned the validity of those loans. What’s hanging up the auction is not a profound legal debate over the fine points of lending to failing companies — it’s timing. Unsecured creditors owed an estimated $500 million have until approximately the second week in April to decide whether they want to sue Standard General to challenge the loans. Given the load of senior debt on the company, those creditors may get little or nothing out of the auction, and can’t afford to walk away from a potentially viable lawsuit. RadioShack needs a sale by March 31 to avoid running up another month’s worth of rent payments. Standard General says it won’t close a takeover deal until its RadioShack loans are recognized as valid.