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American Apparel Inc. is preparing for its second bankruptcy filing in as many years, capping a tumultuous stretch that included tumbling sales, red ink and a split with controversial founder Dov Charney, Bloomberg News reported today. The filing may come as soon as the next few weeks, and could help set the stage for a sale of the Los Angeles-based company by letting it exit leases and shutter part of the retail operation. Still, the plan isn’t yet final and could change as the holiday season approaches. The clothing maker only emerged from bankruptcy in February, when former bondholders — led by Monarch Alternative Capital — took over the company. A turnaround plan to return to American Apparel’s roots and focus on basic items like T-shirts and skirts didn’t improve results enough. The company also has hired restructuring firm Berkeley Research Group for guidance. Read more. 

Read more about the trend of large distressed retailers liquidating rather than reorganizing in “Why Are U.S. Retail Reorganizations So Hard?” in the October ABI Journal. 

Dick's Sporting Goods Inc., teamed up with liquidators, won a bankruptcy auction for the U.S. business of Golfsmith International Holdings Inc. with a bid of about $70 million, Reuters reported on Friday. Dick's plans to keep open at least 30 Golfsmith stores and wind down the rest with liquidators from Hilco Global and Tiger Capital Group. It plans to keep about 500 of the company's employees. Golfsmith had 109 stores in the U.S. at the time of its bankruptcy filing last month, and has been closing stores since then. With the bid, Dick's, the largest U.S. sporting goods retailer, also won Golfsmith's intellectual property and inventory, though the outcome of the auction still has to be approved by a bankruptcy court judge. Read more.

The trend of liquidation, rather than reorganization, for large retail debtors is likely to continue, according to an article in the October ABI Journal. Click here to read the cover article. 

Unsecured creditors unhappy with Cosi Inc.’s auction proposal pushed the flatbread sandwich chain’s lead bidder to increase its offer and won extra time for rival bidders to enter the fray, the Wall Street Journal reported today. Bankruptcy Judge Melvin Hoffman of the U.S. Bankruptcy Court in Boston yesterday said that Cosi could officially put itself up for sale after hearing that hedge fund AB Value Management LLC and Ohio investment firm Milfam LLC will now start the bidding for the casual dining chain at $10 million instead of $6.8 million. They also will take on about $1.6 million in gift-card liabilities, the bidders’ attorney, William Baldiga, said yesterday. The increased stalking-horse offer, as well as a bid deadline that is two weeks later than what Cosi had originally proposed, is the result of negotiations with unsecured creditors who had expressed concerns with the company’s original sale proposal. A federal bankruptcy watchdog also had objected, calling the process “unfair” to rival bidders.

Dick's Sporting Goods Inc. is preparing a bid for the U.S. business of bankrupt Golfsmith International Holdings Inc., challenging an offer by rival retailer Worldwide Golf Shops, Reuters reported yesterday. While bids for Golfsmith, owned by OMERS Private Equity Inc., the buyout arm of one of Canada's largest pension funds, were due earlier on Monday, Dick's was given an extension until today to submit its offer. The bankruptcy auction will the test the value of Golfsmith, which suffered because of competition from discount retailers Wal Mart Stores Inc. and Amazon.com Inc., as well as golf's waning popularity among younger customers. Privately-held Worldwide Golf Shops was preparing to submit a bid for Golfsmith on Monday, in partnership with liquidators from Great American Group LLC. Read more.

Why are U.S. retail reorganizations so hard? Read the cover story of the October ABI Journal. 

More than a month after Hanjin Shipping Co. sought bankruptcy protection in South Korea and in courts around the world, customers are still fighting with the company over how to retrieve their goods, the Wall Street Journal reported today. Ashley Furniture Industries Inc. said that it has been left on the hook for cleaning up the logistical mess in the wake of Hanjin’s bankruptcy and is asking a U.S. judge to allow it to withhold damages from fees it owes to Hanjin. The South Korean shipping company, however, is refusing to release some of Ashley Furniture’s cargo until it is paid in full. Some of Ashley Furniture’s containers have been delivered or otherwise retrieved by the company, many of which are weeks behind schedule. Other containers, still stocked with goods, are floating on Hanjin ships or sitting idle on port tarmacs waiting to be released by the shipper. During a hearing Friday in Newark, N.J., lawyers for Ashley Furniture asked Bankruptcy Judge John Sherwood to help it recover damages of more than $1 million it said that it is owed for having to pick up containers delivered to the wrong ports.

The owner of Tex-Mex restaurant chain Don Pablo’s Mexican Kitchen filed for bankruptcy protection yesterday, blaming the downturn in the casual-dining business and increased competition from “fast-casual” Mexican brands, the Wall Street Journal reported today. Rita’s Restaurant Corp., which operates 16 Don Pablo’s and one Hops Grill and Brewery in 10 states, filed for chapter 11 protection in U.S. Bankruptcy Court in San Antonio. Like other casual eateries, Don Pablo’s has suffered in recent years as cash-strapped diners cut back on eating out, the chain’s bankruptcy lawyer John Mitchell said in court papers. The privately held Don Pablo’s is managed by FMP SA Management Group, an affiliate of Food Management Partners Inc., based in Hollywood Park, Texas. FMP also manages two other Texas-based restaurant chains now in bankruptcy: Buffets Restaurants, which filed for bankruptcy in March, and Zio’s Italian Kitchen, which sought chapter 11 protection last month.

The owner of the Souplantation and Sweet Tomatoes buffet chains filed for bankruptcy yesterday to facilitate a sale of the brands amid the continuing tough environment for restaurants, CFO.com reported yesterday. Garden Fresh Restaurant Corp. plans to close between 20 and 30 underperforming restaurants as part of its chapter 11 reorganization. It currently operates 124 units, primarily on the West Coast and in the Southwest. Garden Fresh, which is owned by private-equity firm Sun Partners, is the ninth restaurant operator to be pushed into bankruptcy since November 2015.