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Retail chain ShopKo is asking a bankruptcy judge for help investigating McKesson Corp., alleging that the drug distributor might have overcharged its stores for years and could be the main reason the retailer’s pharmacy operations failed, WSJ Pro Bankruptcy reported. Lawyers for ShopKo are asking Judge Thomas Saladino of the U.S. Bankruptcy Court in Omaha, Neb., for access to a range of information about McKesson, including all documents showing the cost of supplies sold to the retailer, and any records about the profitability of the relationship, according to court papers filed on Wednesday. ShopKo and affiliated businesses that sought protection from creditors in mid-January are seeking the judge’s blessing for an investigation under rule 2004 of the bankruptcy code, which allows for examination of issues that affect the administration of a case, including a company’s financial condition and past operation.

U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018, Reuters reported. The Commerce Department said yesterday that retail sales tumbled 1.2 percent, the largest decline since September 2009 when the economy was emerging from recession. Data for November was revised slightly down to show retail sales edging up 0.1 percent instead of gaining 0.2 percent as previously reported. The December retail sales report was delayed by a 35-day partial shutdown of the federal government that ended on Jan. 25. No date has been set for the release of the January retail sales report, which was scheduled for publication on Friday. Excluding automobiles, gasoline, building materials and food services, retail sales dropped 1.7 percent last month after a slightly upwardly revised 1.0 percent surge in November. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have jumped 0.9 percent in November.

Gymboree Group Inc., which is closing more than 700 stores after filing for bankruptcy for the second time in two years, wants to pay up to $2.2 million to about 50 key employees, but a federal watchdog says the compensation might not be fair or reasonable, WSJ Pro Bankruptcy reported. The U.S. Trustee’s office, an arm of the Justice Department that monitors the administration of bankruptcy cases, is challenging the proposed incentive and retention plans for executives who the children’s clothing retailer believes are critical to helping it wind down its business. John P. Fitzgerald III, acting U.S. Trustee for the region that includes the U.S. Bankruptcy Court in Richmond, Va., filed an objection on Tuesday, noting that, as hundreds of stores close and thousands of hourly employees are expected to lose their jobs, Gymboree wants to pay bonuses or severance to 52 employees. Gymboree is conducting store-closing sales for, and winding down, all 264 remaining Crazy 8 locations and all 485 remaining namesake Gymboree store and outlet locations.

Edward Lampert has a plan for Sears after its trip through bankruptcy: smaller stores and less apparel, the Wall Street Journal reported. The hedge-fund manager, who steered Sears into bankruptcy and kept it alive with a $5.2 billion offer for its assets, said that he will sell or sublease some of the 425 remaining stores. He plans to devote more of the retail space to tools and appliances. He also wants to open more smaller stores, similar to one in Oak Brook, Ill., which at 62,000 square feet is about one-third its original size. “Our goal is to continue to shrink the size of our stores,” Lampert said. The restructured company, which doesn’t yet have a new corporate name, will be composed of 223 Sears stores and 202 Kmart locations, as well as the Kenmore and DieHard brands. Sears sold its Craftsman brand to Stanley Black & Decker in 2017 but retains a license to sell products under the name. Lampert said he would remain the company’s chairman but would hire a new CEO to carry out his vision. The billionaire, who rescued Kmart from bankruptcy and merged it with Sears in 2005, had served as chief executive since 2013, but he relinquished that role when the company filed for bankruptcy in October.

Some former Toys “R” Us executives are looking to bring back the iconic retailer — Geoffrey the Giraffe and all, CNBC.com reported. Toys “R” Us liquidated its business last year, unable to emerge from bankruptcy after a crippling 2017 holiday season. Its lenders, including Solus Alternative Asset Management and the Angelo Gordon investment firm, took control of the company's intellectual property, which include the Toys “R” Us, Babies “R” Us and Geoffrey brand names. As of Jan. 20, several former Toys “R” US executives began running run a company called "Tru Kids" to manage those brands, said Richard Barry, new president of Tru Kids and former chief merchandising officer of Toys “R” Us. Tru Kids is headquartered in Parsippanny, N.J., a 20 minute drive from Toys “R”  Us' former headquarters in the town of Wayne. The full business plan for Tru Kid is still a work in progress, Barry told CNBC. The new company is exploring multiple options, including stand-alone stores, pop-up shops or partnership like the one Solus and Angelo Gordon previously explored with Kroger. When asked whether Tru Kids would partner with Amazon, Barry said he would "not take anything off the table at all."

Payless Inc. is preparing for its second trip to bankruptcy court with a plan that could drastically shrink the size of the discount shoe chain, Bloomberg News reported. The retailer is seeking a loan to get through bankruptcy proceedings and discussing plans to shutter a significant portion, and potentially all, of its North American stores. Payless struggled to manage debt taken on in a 2012 leveraged buyout by Golden Gate Capital and Blum Capital Partners, filing for bankruptcy protection in April 2017. It emerged with fewer stores, its debt cut in half and creditors owning the company. The chain employs more than 18,000 globally and operates about 3,600 outlets worldwide, according to its website, with more than 2,700 in North America.

Nine West Holdings Inc. reached a deal on Friday that clears a path out of bankruptcy and ends a courtroom contest over grants of legal immunity to private-equity owner Sycamore Partners LP, WSJ Pro Bankruptcy reported. The settlement, announced Friday in a New York bankruptcy court, clears the way for the apparel maker to be taken over by creditors under a chapter 11 plan. It means an improved recovery for bondholders owed more than $700 million that had been blocking confirmation of the plan. Nine West’s term loan lenders will get more than 91 percent of the reorganized company, with junior creditors sharing the rest under the chapter 11 plan. The end of courtroom hostilities translates into more cash for creditors than originally proposed, because of money Nine West won’t have to spend on the court fight.

With backing from former workers at Toys "R" Us Inc. and Sears Holdings Corp. left with little or no severance after their stores closed, New Jersey lawmakers voted on Thursday to require companies to provide compensation to employees dismissed in mass layoffs, Bloomberg News reported. The legislation, approved by the New Jersey Senate Commerce Committee, is the first of its kind among U.S. states, according to one of its sponsors, Senator Joseph Cryan (D) and Jack Raisner, a New York employment attorney who helped draft it. The bill also would extend the employee notice period for mass firings to 90 days from 60 and require warnings about impending bankruptcy filings. The bill is applicable to employers that plan to fire at least 50 workers. It was condemned by the New Jersey Business and Industry Association as a turn-off to companies considering coming to the state. The Trenton-based group also opposed the $15 minimum-wage law, which Governor Phil Murphy signed Feb. 4, as unaffordable and slammed his fiscal 2019 budget for its corporate-tax increase.

A bankruptcy judge said yesterday that he would approve Edward Lampert’s bid to purchase Sears Holdings Corp., a decision that will keep the doors open at more than 400 stores and see 45,000 people keep their jobs, WSJ Pro Bankruptcy reported. Bankruptcy Judge Robert Drain said that he would sign off on Lampert’s $5.2 billion offer to purchase the retailer despite opposition from a number of the company’s creditors, including its big landlords. Lawyers for those creditors had spent the past several days poking holes in Lampert’s bid and arguing he would have trouble keeping the company afloat even if the sale was approved. But Judge Drain in court said yesterday that the Sears chairman and his hedge fund, ESL Investments, have a credible plan to keep 425 stores open immediately, and that the sale marks an opportunity for Sears to better communicate with its vendors and employees.

Wisconsin-based retail chain Shopko Stores has announced more store closings as the company tries to emerge from bankruptcy, the Associated Press reported. Shopko said this week that it plans to close an additional 139 Shopko and Shopko Hometown stores. That brings the list of closings to 251 stores, about two-thirds of the company's retail locations. In addition, the company says it will relocate about 50 optical centers in closing stores to new, stand-alone locations. Shopko filed for bankruptcy protection in January, citing excessive debt and ongoing competitive pressure.