%1

Modell’s Sporting Goods is preparing to file for chapter 11 soon, the New York Post reported. The 131-year-old athletic gear retailer has stopped shopping for a white-knight investor to help renegotiate its 140 leases across nine US states and the District of Columbia, and is likewise giving up on getting better terms from its vendors, Chief Executive Mitch Modell confirmed on Friday. In an interview last month, Modell had blamed his company’s woes on “lousy” local sports teams that have depressed jersey sales, as well as a shorter holiday selling season and the warm winter, which hit jacket, boot and glove sales. At the time Modell’s, which has 2,900 employees, had sent a letter to 19 building and mall owners, asking them to “dig deeper” and lower rents or at least defer them to help the retailer avoid a bankruptcy. On Friday, the CEO said that landlords and vendors alike have balked as Modell’s faces increased competition with Amazon and a slew of big-box retailers.

Art Van Furniture, a Metro Detroit institution and one of the largest furniture retailers in the Midwest, will close all of its company-owned stores and liquidate its inventory after struggling with changing furniture-shopping habits and heavy debt following its acquisition by a private equity firm three years ago, the Detroit News reported. Founded in 1959 with one store by Art Van Elslander, the Warren-based company expanded significantly in the last seven years to 190 stores in nine states, including Michigan, Illinois, Indiana, Missouri and Ohio. All 3,100 of its employees will lose their jobs and questions loomed yesterday about what will fill the space left by the closed stores. In addition to its main stores, the company also operates Art Van PureSleep, Art Van Flooring, Scott Shuptrine Interiors, Levin Furniture, Levin Mattress, Wolf Furniture and Gardiner Wolf Furniture. All of those stores will close except for some of the Levin and Wolf stores. Former Levin President and owner Robert Levin has agreed to acquire the bulk of the Levin and Wolf Furniture operations in Pennsylvania and Ohio, pending court approval.

CraftWorks Holdings LLC, parent company to the Boulder-born Old Chicago Pizza & Taproom restaurant chain, filed for Chapter 11 bankruptcy protection yesterday in the U.S. Bankruptcy Court in Delaware, the Loveland (Colo.) Reporter-Herald reported. In total, CraftWorks plans to close 37 of its 338 restaurants. Court documents have yet to detail which locations are included in that 37. CraftWorks lists assets between $100 million and $500 million and liabilities within that same range. The firm has between 1,000 and 5,000 creditors, according to court documents. The firm announced yesterday a credit and asset purchase agreement with investor Fortress Credit Co. that reduces CraftWorks’ debt by $140 million, or about 60 percent.

Disgruntled investors, including hedge fund Aurelius Capital Management, have ignited a fresh legal battle over Nine West Holdings Inc. — a year after the retailer exited bankruptcy with different owners, a new name and less debt, Bloomberg News reported. The lawsuit is the creditors’ second case involving the footwear chain after their investments suffered losses of more than 80 percent. They sued Sycamore Partners last year, a case that was settled after Sycamore paid them $120 million to drop claims that its 2014 buyout rendered Nine West insolvent while enriching shareholders by over $1 billion. The new lawsuit target: executives at Nine West and its then-parent, Jones Group Inc., who worked with Sycamore to complete the buyout and shared in the windfall. They aren’t covered by the settlement over previous claims. “These directors and officers closed their eyes to the fact that the 2014 transaction would leave NWHI insolvent, inadequately capitalized, and unable to pay its debts,” said the complaint, filed Feb. 13 in U.S. District Court in Los Angeles. Sycamore’s takeover “enriched everyone involved except the company and its creditors.” The suit was brought by the trustee for a group of unsecured Nine West creditors and demands the payments the defendants collected, plus interest. The creditor group held junior debt at Nine West at the time of its bankruptcy and recovered as little as 12 cents on the dollar. Meanwhile, Sycamore earned a 250 percent return on its equity investment of $108 million and more than doubled its money on the entire 2014 transaction, according to calculations included in the lawsuit.

A judge said bankrupt greeting cards and stationery retailer Papyrus can sell leases to about 30 of its stores to private equity-backed rival Paper Source Inc., WSJ Pro Bankruptcy reported. Paper Source will pay $575,000 for the locations, as well as their furniture, fixtures and equipment, a lawyer for Papyrus said yesterday in U.S. Bankruptcy Court in Wilmington, Del. Founded in 1983, Paper Source will expand to 165 stores through the deal. The Chicago-based company, which is owned by private-equity firm Investcorp, said it plans to remodel the stores and rename them Paper Source. Paper Source sells gifts, greeting cards, gift wrap, craft kits, party supplies and custom invitations, announcements and stationery. Papyrus filed for bankruptcy in January with a plan to close all its stores in the U.S. and Canada after it was unable to find a buyer to keep the locations and sister outlets, American Greetings, Carlton Cards and Paper Destiny, in business. Schurman Fine Papers, which runs the greetings cards business, entered bankruptcy with 254 stores. The Tennessee-based business said that it expects to finish closing its remaining stores by the end of February.

Modell’s Sporting Goods Inc. saved an additional two stores originally scheduled to close in New York City in its Hail Mary attempt to keep the retailer afloat, Bloomberg News reported. After negotiations with landlords at 19 stores that were slated to close, Modell’s will keep stores located at 150 and 280 Broadway, in New York, open for business, Chief Executive Officer Mitchell Modell said yesterday. The remaining 17 are still scheduled to close in about 60 days, by the end of April, he said. The two are in addition to an earlier five locations that Modell’s planned to shutter, which are also staying open thanks to the negotiations, he said. The landlords at the two stores in Manhattan agreed to rent concessions, reversing the original decision to shut the doors. “We are thrilled to work with our landlord partners who were kind enough to understand the situation and preserve the 49 union jobs in both stores,” Modell said. For the first time, Modell is offering up some of his equity in the business. The executive said he’s willing to sell a minority stake in Modell’s to outside investors who can support the business through its turnaround.

Stage Stores has laid off corporate staffers this week, Retail Dive reported. The exact number of employees let go is unclear, as the company did not announce the total layoffs to staff, but two sources said the number was more than 20, and potentially dozens. Many of those let go were allocators and buyers in the retailer's merchandising operations. This week's layoffs follow others from last week. The department store chain, which is undergoing a rapid transformation to off-price via its Gordmans banner, is also planning to shutter stores. The company sent an email Monday marking 60 existing Gordmans stores for closure as well as 10 department stores that were slated to become Gordmans stores. Those are on top of 40 stores the company marked for closure last fall. Stage Stores has staked its future on Gordmans. In the fall, the company announced accelerated plans to convert its entire store fleet to the Gordmans banner, which would have given it around 700 by the end of the year. (That figure does not account for the recently planned closures, which have not been announced publicly.)

Cosi Inc., a fast casual restaurant chain, filed for its second bankruptcy with plans to cut costs and shift its focus to catering under recent pressure from changing consumer dining habits, Bloomberg News reported. The Boston-based restaurant chain filed for chapter 11 protection in Wilmington, Del., with assets and liabilities between $10 and $50 million, according to court documents. The filing comes after Cosi commenced a restructuring of its operations by closing 30 of its stores in December and increased its emphasis on catering, according to a company statement. It previously sought creditor protection in 2016. Founded in 1998, the company known for its oven-baked flatbread, offers breakfast, lunch and dinner, as well as desserts and catering services. It operates in locations across the U.S. and Costa Rica, with plans to expand in Central America in the future, according to its website.