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Edward S. Lampert’s ESL Investments hasn’t failed, but may be setting a benchmark for slow, painful declines thanks to its outsize, long-term bet on two venerable retailers, Sears and Kmart, the New York Times reported on Friday. Last week, Sears Holdings, the parent company, said what was becoming increasingly obvious to most investors, not to mention anyone who’s been in a Sears store lately: “Substantial doubt exists related to the company’s ability to continue as a going concern.” Sears said that the statement reflected a new, more stringent accounting rule, and that the company was in no imminent danger of bankruptcy. “We are a viable business that can meet its financial and other obligations for the foreseeable future,” said Jason Hollar, Sears’s chief financial officer. “It takes a retailer like Sears a long time to die,” said Greg Melich, senior managing director and head of consumer research for Evercore, and the last Wall Street analyst still covering Sears. “It’s been burning through over a billion dollars in cash every year. That’s not sustainable.”

Struggling electronics retailer RadioShack may lay off as many as 150 people and close its headquarters in Fort Worth, Texas, as part of its bankruptcy proceedings, the Dallas Morning News reported. The Fort Worth retailer sent a notice to the state about the coming layoffs, which are expected by late May. In a letter to the Texas Workforce Commission, the company said that it is trying to "reorganize and emerge from bankruptcy as an ongoing business." It may have to close the headquarters, if it cannot come up with a way to restructure. Even if it does restructure, however, it may have to lay off employees, the letter said. RadioShack is going through its second bankruptcy filing in just over two years. It filed its most recent petition in bankruptcy court in Delaware in March. As part of that filing, the company said that it would close about 200 stores and consider options for the remaining 1,300 stores.

The U.S. Supreme Court yesterday declined to hear a bid by retailers to revive a $7.25 billion antitrust settlement they reached with Visa Inc. and Mastercard Inc. over claims the card networks improperly fixed credit and debit card fees, Reuters reported. The Court left in place a 2016 lower court decision that threw out the settlement on the basis that it was unfair to retailers that stood to receive no payments and derive no other benefits. The brief Supreme Court order noted that Chief Justice John Roberts and Justice Samuel Alito did not participate in consideration of whether to take up the appeal. The settlement had been intended to resolve claims that merchants were overcharged on interchange fees, or "swipe fees," when shoppers used credit or debit cards, and were barred from directing customers toward cheaper means of payment. The deal had been the largest all-cash U.S. antitrust settlement, although its value shrank to about $5.7 billion after roughly 8,000 retailers "opted out."

The trustee in Spice Modern Steakhouse’s bankruptcy case is asking the court to liquidate the Orlando restaurant after its third bankruptcy reorganization filing in seven years, the Orlando Sentinel reported on Saturday. Court documents filed in federal bankruptcy court in Orlando by the trustee said the company might have been involved in “criminal activity consisting of underreporting sales and the amount of sales tax due.” The documents say Spice Modern Steakhouse and parent company Level 1 Inc., owe $262,105 to Florida Department of Revenue for back sales-tax payments. That number has accumulated starting with the company’s first bankruptcy filing in 2009, court records show. The most recent bankruptcy reorganization petition was filed by Spice ownership in November. Read more. 

Why is your favorite restaurant closing? A panel of experts at ABI’s Annual Spring meeting will discuss and analyze the various and peculiar restructuring issues related to restaurant chapter 11 cases, and forecast whether this industry will continue to incur financial distress. Click here to register- rates go up Friday! 

Ford Motor Co. raised a caution flag for the auto industry, saying higher interest rates and a steady decline in used-car values will hurt the most important factor in the recent U.S. sales boom: affordability, the Wall Street Journal reported today. The outlook, coming as the company forecast leaner results for the first quarter, comes amid a broader view that car sales in the world’s two largest markets have peaked after a string of record profits and sales for the U.S. auto industry. Ford estimates volumes will fall in the U.S. and China in 2017 and again in 2018.

Videogame chain GameStop Corp., hit hard by a shift to digital downloads, plans to close at least 150 stores this year and expand nongaming businesses, the Wall Street Journal reported today. Sales and earnings fell by double digits in the latest period, and the GameStop brand lost some market share during the holiday season due to discounts, Chief Executive J. Paul Raines said yesterday. Publishers, Mr. Raines said, started cutting prices earlier than expected, “leading to a steep decline in retail pricing.”

The Gordmans bankruptcy has attracted two bidders who want to keep at least some of the company's 106 discount department stores operating, the Associated Press reported yesterday. The Omaha, Neb.-based company, filed for bankruptcy protection last week and announced plans to liquidate its inventory after posting losses in five of its last six quarters. Former Gordmans CEO Jeff Gordman is leading one of the groups interested in the company's assets. Gordman left the company in 2013 after clashing with the Sun Capital private equity firm that owns half the company. The other potential bidder is Houston-based Stage Stores that operates roughly 800 stores under several different brands. Bankruptcy Judge Thomas Saladino said at a hearing on Monday that finding a buyer to continue operating the stores would be the best outcome for employees. But any bids will have to be deemed fair to Gordmans' creditors who are owed $131 million.

The corporate owner of Sears and Kmart said on Tuesday that there was “substantial doubt” that it could continue as a going concern, as bricks-and-mortar stores continue to face challenges in an e-commerce world, the New York Times reported today. In a filing with the Securities and Exchange Commission, the corporate owner, Sears Holdings Corporation, cited its efforts to cut costs, sell property, tap new funding sources and make other moves to stanch the flow of red ink. Still, it reported a $2.2 billion loss for last year and said that it had to use money from its investments and financing activities to fund operations. “Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” it said in the filing, its annual report.

Payless Inc., the struggling discount shoe chain, is preparing to file for bankruptcy as soon as next week, Bloomberg News reported yesterday. The company is initially planning to close 400 to 500 stores as it reorganizes operations. Payless had originally looked to shutter as many as 1,000 locations, and the number may still be in flux. Payless was bought by private equity firms Golden Gate Capital and Blum Capital Partners in 2012 as part of the breakup of publicly traded Collective Brands Inc. The company, founded in 1956 in Topeka, Kansas, employs almost 22,000 people, according to its website. It has more than 4,000 stores in 30 countries.