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Some suppliers to Toys “R” Us Inc. have scaled back shipments to the retailer as it struggles to refinance debt and avoid a potential bankruptcy filing, Bloomberg News reported. The vendors are balking as Toys “R” Us continues talks with lenders over a new loan that would allow the company to stay open while it works out a recovery plan through bankruptcy proceedings. The loan is being marketed by Lazard Ltd. to banks and existing creditors. Toys “R” Us needs to find a financial solution quickly and resume shipments because the cash-strapped chain makes about 40 percent of its sales during the fourth-quarter holiday season, according to company filings. The toy merchant has been seeking to refinance $400 million of debt that comes due next year.

Women’s shoe retailer Aerosoles Group is planning to file bankruptcy to exit its unprofitable store leases, Reuters reported yesterday. The shoe seller’s bankruptcy will come as soon as this month. Aerosoles, known for its comfortable flats and wedges sold in its own shops and in department stores, plans to remain in business, unlike many other retailers who filed for bankruptcy in recent years and liquidated. The shoe seller, which has about 80 stores in the U.S., plans to move forward after bankruptcy with about a quarter of those locations, the people said. Aerosoles has not made rent payments for September. Read more. 

What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17. 

Vitamin World Inc., a specialty retailer formerly owned by vitamin manufacturing giant Nature’s Bounty, filed for chapter 11 protection on Monday with a plan to close dozens of its underperforming stores, the Wall Street Journal reported. The vitamin and supplements seller said in court papers that it has identified 51 stores it intends to close as part of its restructuring under chapter 11. Vitamin World, which operates some 334 stores, blamed its bankruptcy on “significant supply chain and ingredient availability disruptions” along with “above-market rents and underperforming retail stores,” in papers filed with the U.S. Bankruptcy Court in Wilmington, Del.

If Toys “R” Us chooses to file for bankruptcy protection as a means of unburdening itself from its significant debt, Morningstar Credit Ratings released a report that the retailer could place $3.6 billion in commercial mortgage-backed securities loans at risk, the Commercial Observer reported yesterday. The toy retailer has reportedly hired law firm Kirkland & Ellis to restructure approximately $400 million in revolving and long-term debt due in 2018, which may result in the bankruptcy filing. Last week, a Toys “R” Us spokeswoman told Commercial Observer that the retailer is currently “evaluating a range of alternatives to address our 2018 debt maturities,” and would provide an update on those activities during its second-quarter earnings call on Sept. 26.

Ailing retailer rue21 got a fresh start in bankruptcy court, and its exiting owners, Apax Partners, got out from under the threat of lawsuits from vendors, landlords and other creditors owed $409 million, the Wall Street Journal reported today. A seller of low-cost apparel and accessories to young adults, rue21 blamed “an evolution in customer tastes” and competition from online sellers of goods for its financial distress, and closed 396 stores. Rue21 expects to have 780 stores in operation when it exits bankruptcy, court papers said. When it emerges from bankruptcy, rue21 will have beaten the odds against large store chains. Retailers such as Sports Authority and American Apparel, once familiar sights in shopping areas across the country, were swept under and liquidated in bankruptcy. Reorganized, rue21 will be worth from $340 million to $465 million, its advisers estimate, with $700 million in financial debt erased from the books. Read more. (Subscription required.) 

What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17. 

The Original Soupman Inc., the soup chain and wholesaler made famous by the "Seinfeld" television series, won court approval this week to sell all of its assets, Dow Jones Newswires reported on Friday. Bankruptcy Judge <b>Laurie Silverstein</b> signed off on the sale Thursday, court papers show. The approval comes a week after Judge Silverstein expressed concerns about the nature of the sale process, sending the company and its buyer back to the drawing board, Soupman attorney Jeremy Johnson said. The company licenses the recipes, likeness and name of Al Yeganeh, the man who inspired the "Soup Nazi" character on "Seinfeld." It sought bankruptcy protection in mid-June, soon after one of its former top executives was indicted on charges of tax evasion.

RadioShack is moving ahead with a reorganization that will save a sliver of the former electronics retailing icon, the Wall Street Journal reported today. The reorganized company will be comprised of online operations, a network of independent dealers and “between zero and 28” company-owned brick-and-mortar stores, as detailed in a chapter 11 exit plan that cleared preliminary court review yesterday. The company filed for bankruptcy protection in March, its second filing in two years. Fewer than 30 stores remain in operation from a chain that, before its first bankruptcy in 2015, numbered 4,400. It isn’t known yet whether any will survive, or whether RadioShack will retreat from brick-and-mortar operations entirely, and depend on independent dealers for sales. Judge Brendan Shannon set an Oct. 25 hearing date for confirmation of the chapter 11 plan for the company known as General Wireless Inc., which does business as RadioShack.

Children’s apparel retailer Gymboree Corp. said yesterday that the U.S. Bankruptcy Court for the Eastern District of Virginia has confirmed its plan of reorganization, Reuters reported. The retailer also said a comprehensive recapitalization will be completed that will eliminate more than $900 million of debt. Kirkland & Ellis LLP is serving as the company’s legal counsel, AlixPartners LLP is serving as its financial advisor, and Lazard is serving as its investment bank, according to the statement. Gymboree had filed for chapter 11 protection in June 2017 with a plan to cut its debt by around $1 billion and close 375 stores. Read more.

What does the future hold for retail bankruptcies? Be sure to attend ABI’s Bankruptcy 2017: Views from the Bench on October 17.