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More than $170 million in dividends that bankrupt retailer ShopKo paid to private-equity firm Sun Capital Partners Inc. and other owners since 2005 are being investigated by a special committee in the chapter 11 proceedings, the Wall Street Journal reported. Green Bay, Wis.-based ShopKo filed for bankruptcy in January with more than $1 billion in liabilities. A special committee of independent directors of the chain said in a filing in U.S. Bankruptcy Court on Wednesday that, since December, it has been investigating certain transactions between the company and its equity owners, including whether the bankrupt business might have any claims against those parties. Among other things, the special committee is looking into several dividend payments that ShopKo made to its equity owners since Sun Capital acquired the business in 2005. The court filing summarizes five such payments totaling more than $170 million.

J.C. Penney plans to close 15 additional full-line stores and nine home-and-furniture locations as the retailer struggles to get its footing amid significant challenges for department stores, USA Today reported. The chain announced today that it would close the stores because they are not performing well or "represent a real estate monetization opportunity." J.C. Penney had been reviewing its locations for potential closures as it seeks to cut costs amid a downturn in sales. The retailer had 864 department stores as of Nov. 3, according to a public filing. The latest move comes after the company had already announced three full-line store closures in January, bringing the total closures for 2019 to 30. Sales at J.C. Penney stores open at least a year fell 4 percent in the fiscal fourth quarter, which includes the critical holiday shopping season. Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

Lawyers working to pay off the final bills of bankrupt sporting goods distributor AcuSport Corp. have sued the South Carolina company that purchased its operations last year, saying the buyer broke its promise to cover more than $280,000 worth of transition costs, the Wall Street Journal reported. In a lawsuit filed Friday, AcuSport lawyers said that South Carolina outdoor-products distributor Ellett Brothers LLC hasn’t paid the bill they sent over in January after the sale closed. Under the sale contract, Ellett Brothers agreed to pay $7.4 million and reimburse some operating expenses, including business and license fees, utility charges and equipment rentals, according to a copy of the agreement filed in U.S. Bankruptcy Court in Columbus, Ohio. Since the deal closed, Ellett Brothers hasn’t complied “with these reimbursement obligations,” AcuSport lawyers said in court papers. The lawsuit puts the payment dispute before Judge John Hoffman Jr. Ellett Brothers took over AcuSport’s struggling operations, which sold outdoor and shooting sports products to a network of major retailers, after Judge Hoffman approved the sale in June. The Bellefontaine, Ohio, company employed about 200 workers at the time it filed for bankruptcy in May 2018, a move that accelerated its search for buyers.

A court-appointed investigator said he has found evidence that Samuels Jewelers, a century-old U.S. retail chain that filed for bankruptcy last year, laundered money as part of an alleged $2 billion fraud on India’s Punjab National Bank, WSJ Pro Bankruptcy reported. The investigator, John Carney, was appointed by a judge last year to look into the U.S. end of an alleged international fraud that ran for years across the U.S., India, Hong Kong and the United Arab Emirates. His probe of Samuels homed in on a complex in Austin, Texas, where a collection of businesses controlled by Mehul Choksi shuffled tens of millions of dollars in cash and diamonds around, creating the illusion of deals with outside companies, the report said. Choksi, chairman of the company that owns Samuels, is wanted by Indian authorities and contact information for him isn’t available.

Lawyers for creditors of Payless ShoeSource Inc. blasted the hedge fund that took control of the troubled retailer after its first bankruptcy, saying it drove the company back into chapter 11 less than two years later, WSJ Pro Bankruptcy reported. Creditors took aim at Alden Global Capital during a Tuesday court hearing, alleging Payless was the victim of a series of insider transactions designed to benefit the hedge fund at their expense. “During this time [under Alden’s control], the business burned a substantial amount of capital and deteriorated from the reorganized company that it was when it emerged from bankruptcy to the chapter 22 filer that it is today, where its North American operations are liquidating,” attorney Stephen Zide said in court. Payless sought chapter 11 protection on Monday, the retailer’s second trip through bankruptcy in less than two years. As part of its first restructuring, a group of lenders, including Alden, converted their debt into equity for a 91 percent stake in the reorganized shoe seller. Although Alden was a minority holder at the time of the chain’s exit from the first bankruptcy, it has since increased its position to 66.5 percent as of the Monday bankruptcy filing, court papers show.

Women’s fashion retailer Charlotte Russe Holdings Corp. is still searching for a buyer that can purchase the cash-strapped chain out of bankruptcy, but is preparing to liquidate if it can’t find a deal in the next couple of weeks to save the business, the Wall Street Journal reported. Charlotte Russe has signed a stalking-horse agreement with liquidators Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC, according to papers the company filed on Tuesday in the U.S. Bankruptcy Court in Wilmington, Del. The agreement with liquidators, which is subject to higher bids, starts the clock on a crucial two-week window that likely will determine the fate of Charlotte Russe. The company could close the chain if a buyer doesn’t place a better bid to keep the retailer operating out of bankruptcy as a going concern.

Samuels Jewelers, a 112-store retailer with roots that date back more than a century, told employees on Feb. 14 that it will shut all of its stores by Feb. 25, JCKOnline.com reported. The Austin, Texas–based retail chain, which does business under the Samuels Diamonds, Rogers, Andrews, and Schubach nameplates, had filed for chapter 11 on Aug. 7. In October, it launched store-closing sales, but still hoped that a suitor would purchase its profitable stores. According to an email sent to employees and obtained by JCK, that is no longer feasible. “Until Feb. 12, we, the current management of Samuels, were very hopeful and confident that a transaction we had located would allow 60 to 64 go-forward stores and the continuation of the business under new ownership,” it said. “However, our secured lender Wells Fargo has chosen to exercise their ability to obtain, among other things, the intellectual property rights for all the consumer-facing business names…as well as the web addresses for all the brands and the unsold inventory. This effectively ensured that the transaction we were diligently pursuing…will not be possible now or in the foreseeable future.” In a Feb. 14 court filing, the company canceled a scheduled auction of its assets, saying it would go with Wells Fargo’s credit bid.

U.S. discount retailer Payless ShoeSource Inc. today filed for chapter 11 protection for the second time, along with its North American subsidiaries, and said that it would wind down all North American stores by the end of May, Reuters reported. The retailer will close about 2,500 stores in North America starting from the end of March and wind down its e-commerce operations. “The prior proceedings left the company with too much remaining debt, too large a store footprint and a yet-to-be realized systems and corporate overhead structure consolidation,” Chief Restructuring Officer Stephen Marotta said. Stores outside North America were not included in the chapter 11 filing and will continue operations, the retailer added. The company exited bankruptcy in 2017 with about $400 million in loans, after slashing its debt pile from over $800 million, according to court papers. Payless listed both assets and liabilities in a range of $500 million to $1 billion in a filing in the U.S. Bankruptcy Court for the Eastern District of Missouri.

U.S. discount retailer Payless ShoeSource Inc. plans to close all of its approximately 2,300 stores when it files for bankruptcy later this month for the second time in as many years, Reuters reported. The move would make Payless one of the most high-profile victims of the string of bankruptcies that have hit the brick-and-mortar retail sector as more shopping is done online. Toys “R” Us and The Bon-Ton Stores are among the retailers that shut their stores in liquidations in the last 12 months. Payless had been trying unsuccessfully to find a buyer. After no such deal could be clinched, the Topeka, Kansas-based company has decided to initiate preparations to liquidate. There is still a small chance a buyer could emerge after Payless files for bankruptcy. In the meantime, the company is preparing to run going-out-of-business sales at its shops in the next week.