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Leonard Riggio radically altered bookselling in America when he bought an ailing New York City bookstore and turned it into a national chain of megastores. Now, his company — Barnes & Noble — is floundering, the publishing industry that depends on it is worried, and Riggio has nobody to turn to but himself, the New York Times reported. That much became starkly evident last month when Barnes & Noble abruptly fired its chief executive, Demos Parneros, with little explanation. Parneros was the fourth noninterim chief executive in five years, a remarkable amount of turnover at a large company. The news left alarmed publishers and investors complaining that the chain is once again dealing with a management vacuum when it desperately needs to adapt and innovate. Sales are falling. The Nook, Barnes & Noble’s attempt at selling electronic books, became a financial drain. Critics say that the company lacks direction, sometimes seeming to prioritize sales of gifts and tchotchkes over books. For investors, the impact is already evident: Barnes & Noble’s stock price is down 60 percent over the last three years.

Samuels Jewelers Inc., a Texas-based chain that was controlled by Mehul Chinubhai Choksi, the uncle of fugitive jewelry designer Nirav Modi, has filed for chapter 11 protection, the Wall Street Journal reported. Choksi and Modi are both wanted by Indian authorities, who are investigating an alleged multibillion-dollar bank fraud. Modi’s U.S. jewelry businesses have been in bankruptcy since February and largely have been sold off. Samuels, which operates more than 120 jewelry stores in the U.S., has called in liquidators to start selling off inventory to pay off debts of more than $100 million, according to papers filed yesterday in the U.S. Bankruptcy Court in Wilmington, Del. Court papers also say that there are plans to close more than 100 stores. Samuels owes $84 million to banks led by Wells Fargo Bank N.A., $10 million to GB Credit Partners LLC, and has debt to suppliers of goods and services of more than $28 million, according to court papers.

A hedge-fund manager known for wagering on the demise of the weakest American malls is raising the stakes, betting some of the hardest-hit shopping centers are in a death spiral, the Wall Street Journal reported. Eric Yip, chief investment officer of Alder Hill Management, has been buying a credit default swap index known as the CMBX. It tracks the values of mortgages backed by commercial property. Yip’s investment goes up in value when shopping centers, whose debt is reflected in the index, struggle to make payments or default on their loans. Alder Hill is betting against the riskiest loans to weaker malls with high debt and tepid prospects. The New York hedge fund disclosed this in a report in January 2017, though it didn’t disclose the amount of its bet. Read more. (Subscription required.)

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. 

Senior lenders to Toys “R” Us Inc. will make an opening bid of $760 million for the bankrupt retailer’s Asia operations, far less than the $1 billion offers the company touted just a few months ago, Bloomberg News reported. The lenders would make a so-called "credit bid" by using their senior secured notes in the Asia business rather than cash, and win ownership of the unit during an auction next month in New York, according to court documents filed Saturday. Noteholders eligible to participate include York Capital Management Global Advisors LLC, Barclays Bank Plc and Cerberus Capital Management LP, related court papers show. Before an auction is scheduled, Toys wants a U.S. federal judge to strip the company’s minority partner in Asia, Fung Retailing Ltd., of its right-of-first-refusal purchase option as well as forcing Fung to agree to sell its 15 percent stake in the joint venture. Toys’s 12 percent first-lien bonds that mature in 2021 fell more than 5 cents to 70.5 cents on the dollar on Monday, the biggest drop since they were issued in 2016, according to Trace bond price data. In April, a lawyer for Toys told the judge overseeing the company’s bankruptcy that it had multiple bids worth more than $1 billion for the Asia business. Toys owns nearly 85 percent of the venture and Fung owns the rest. Read more. 

Need more insight into credit bidding in bankruptcy? Pick up a copy of ABI’s Credit Bidding in Bankruptcy Sales: A Guide for Lenders, Creditors, and Distressed-Debt Investors. 

Mattress Firm Inc., the largest U.S. mattress retailer, is considering a potential bankruptcy filing as it seeks ways to get out of costly store leases and shut some of its 3,000 locations that are losing money, Reuters reported. Mattress Firm’s South African parent, Steinhoff International Holdings NV, has been working on a deal to restructure the debt of some subsidiaries with its creditors, following an accounting scandal. Creditors agreed last month to hold off on their debt claims for three years. Steinhoff acquired Mattress Firm for $3.8 billion in 2016. Both Houston-headquartered Mattress Firm and Steinhoff are working with consulting firm AlixPartners LLP, the two sources said this week. AlixPartners helps companies plan and execute turnaround strategies, and is often brought in to lay the ground for bankruptcy.

Real Mex Restaurants agreed to sell its assets to Z Capital Group and to facilitate the sale it voluntarily filed for chapter 11 protection, said the U.S. restaurant chain’s holding company RM Holdco LLC, Reuters reported. Real Mex, which operates Chevys Fresh Mex, El Torito, and other full-service Mexican restaurant brands, will remain open and operate as usual during the chapter 11 process, the company said. RM Holdco lists assets in the range of $50 million to $100 million and liabilities in the range of $100 million to $500 million, according to a filing in the U.S. Bankruptcy Court for the District of Delaware. Z Capital agreed to buy all of Real Mex’s assets and assume certain liabilities, and along with co-owner Tennenbaum Capital Partners has agreed to provide $5.5 million in debtor-in-possession financing, the company said. Sidley Austin LLP is serving as legal adviser, Alvarez & Marsal is its financial adviser, and Piper Jaffray & Co. is the M&A adviser, Real Mex said.

Gump’s, a San Francisco luxury department store founded in 1861, filed for bankruptcy protection late Friday, the San Francisco Chronicle reported. The company said that it is seeking a buyer and plans to liquidate merchandise to pay off lenders, with Hilco Merchant Resources and Gordon Brothers handling sales. The company and its affiliates reported $61 million in assets and $64 million in liabilities in the Nevada bankruptcy filings. The Gump family founded the company and survived the 1906 earthquake, which destroyed its store. Merchandise includes mirrors, Asian rugs, porcelain and silks, according to the company’s website. Gump’s expanded beyond its retail location with a catalog in the 1950s. Its online and catalog sales now account for more than 75 percent of total sales and more than 90 percent of sales are outside the Bay Area, the company said in May.

National Stores Inc., an off-price U.S. apparel and housewares store operating under banners including Fallas and Factory 2-U, is preparing to file for bankruptcy as early as next week, Reuters reported. National Stores plans to shutter at least 70 of its approximately 350 stores in bankruptcy, said the sources, asking not to be named because the family-owned company’s plans were not yet public. National Stores may also seek to find a buyer during the bankruptcy process, which will be overseen by a Delaware court, the sources added. National Stores was founded in downtown Los Angeles in 1962, and sells back-to-school items such as uniforms, hospital scrubs and shoes for as low as $3.99, according to its website. An affiliate of National Stores acquired some of the intellectual property assets of Anna’s Linens, a home goods seller, during its 2015 bankruptcy, according to court papers. National Stores still runs some Anna’s Linens shops, according to its website. 

Some former and current Sears franchisees are in financial distress amid the parent company’s financial troubles, the Wall Street Journal reported. Sears has closed hundreds of its department stores and lost billions in sales since 2011. When the company in charge struggles, a franchisee often struggles with it, said Keith Miller, principal of Franchisee Advocacy Consulting, an industry group. “If you’re a handyman service, you can’t control what the retail business has done,” he said. Sixty-six Sears franchises were terminated in 2017, or 15 percent of the total, compared with just 5 percent in 2016. In 2015, the number of franchises increased 6.6 percent. A Sears spokesman said that some franchisees initially open multiple concepts before choosing one, resulting in some of the 2017 closures. “We do, on occasion, see some franchisees start their business and then go ‘dormant’ after realizing it isn’t a good fit for them,” he added. The initial investment required to open a Sears franchise is $50,000 to $110,000, according to the retailer’s website.

Brookstone Inc. filed for chapter 11 protection listing assets of $50 million to $100 million and liabilities of $100 million to $500 million, Bloomberg News reported. This will be Brookstone’s second trip to bankruptcy court since 2014, when the Merrimack, N.H.-based company filed a chapter 11 petition with a deal to sell its assets to Spencer Spirit Holdings Inc. for about $146.3 million. A group of Chinese buyers backed by retailing conglomerate Sanpower Group and Hong Kong-based private-equity firm Sailing Capital subsequently outbid Spencer with a deal valued at about $174 million. The 53-year-old company began with an ad placed in Popular Mechanics, according to its website, and was named after the farm where the founders lived. In 1973, it expanded from its catalog offerings (with items like self-watering plant pots) to open its first store. The company says it helped introduce brands such as Fitbit and iRobot to American consumers.