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Sears Holdings Corp., Claire’s Stores Inc. and Nine West Holdings Inc. are among seven chains at high risk of defaulting within a year as shoppers shift to online merchants and spend more on experiences, according to a Fitch Ratings study of retail bankruptcies, Bloomberg News reported yesterday. The companies were named in a report yesterday that found retailers wind up liquidated almost three times more often than other companies in bankruptcy because customer defections are making turnarounds harder to execute. Other chains at risk include True Religion Apparel Inc., 99 Cents Only Stores LLC, Nebraska Book Co. and Rue21 Inc., Fitch said. The credit-grading firm studied 30 recent retail bankruptcies that involved $10.5 billion of debt. Fifty percent didn’t survive the process, compared with 17 percent across other industries, Fitch said. Grocery chains were an exception, with five of six emerging as operating businesses because they had strong locations, Fitch said. Read more. 

Does bankruptcy still work for retail? Listen to the perspectives of bankruptcy judges and top practitioners at ABI’s Views from the Bench in Washington, D.C. on October 7. Register here. 

Fast-casual restaurant chain operator Cosi Inc. and its units filed for chapter 11 protection yesterday and said that it would pursue a sale, Reuters reported. The Boston-based company, known for its homemade flat bread, has assets of $31.24 million and debt of about $20 million, according to a court filing. Cosi said that it had received about $4 million in post-petition debtor-in-possession financing to maintain operations during the chapter 11 process. The company said that it had entered into a non-binding agreement with lenders AB Opportunity Fund LLC, AB Value Partners LP and entities affiliated with Milfam II LP under which the DIP lenders offered to buy Cosi's assets and serve as a stalking-horse bidder in a sale process.

A move by a pair of mall owners to rescue distressed retailer Aéropostale Inc. shows how some landlords are getting more aggressive as they seek to stem a rising tide of vacancies and store closings, the Wall Street Journal reported today. Simon Property Group and General Growth Properties Inc. were part of a consortium that last week won an auction to purchase teen-apparel retailer Aéropostale, an unusual move in which shopping-center landlords stepped in to rescue a tenant to preserve the tenant’s business. The push to take over the struggling retailer comes at a time when changing shopping habits and the growth of e-commerce are eating into traditional retailers’ revenue and in some cases forcing store closures. That, in turn, is weighing on mall operators, forcing some to reconfigure their properties and add other attractions to bring in shoppers. Simon and General Growth saw value in keeping afloat Aéropostale, which had filed for chapter 11 protection in May and later faced the threat of liquidation. Aéropostale stores potentially generate more than $1 billion in global retail sales, of which more than $800 million is from the U.S., said General Growth Chief Executive Sandeep Mathrani in a news release. Simon counts 160 Aéropostale stores and General Growth has 77 in their respective tenant portfolios. Read more. (Subscription required.) 

Does bankruptcy still work for retail? Listen to the perspectives of bankruptcy judges and top practitioners at ABI’s Views from the Bench in Washington, D.C. on October 7. Register here.

Claire’s Stores Inc., the retailer owned by Apollo Global Management LLC, said it’s now in “advanced discussions” with a key lender about allowing its stalled recovery plan to proceed after missing a debt payment, Bloomberg News reported yesterday. The lender waived declaring a default as the tween jewelry chain continues to negotiate changes to its Europe credit facility, according to a regulatory filing yesterday. The accord with the unspecified lender would include consents to complete a debt swap and obtain cash, Claire’s said. Claire’s also received a waiver from lenders to its U.S. credit line, assuming the company is able to complete the pending exchange offer, according to the filing. Without the waivers, the retailer would have been in violation of covenants governing its fixed-charge cover ratio under the European credit facility and the total net secured leverage ratio under the U.S. credit line as of July 30, Claire’s said. The company missed $77 million of interest payments due Sept. 15 on some of its notes, citing the European lender’s refusal to approve the pending debt swap, and said it would use a 30-day grace period to find a solution. Read more. 

Does bankruptcy still work for retail? Listen to the perspectives of bankruptcy judges and top practitioners at ABI’s Views from the Bench in Washington, D.C. on October 7. Register here. 

Claire’s Stores Inc. missed a bond payment deadline, leaving the troubled retailer owned by Apollo Global Management LLC 30 days to avert a default and possible bankruptcy, Bloomberg News reported on Friday. The company missed $77 million of interest payments due Sept. 15 on some of its notes after one of Claire’s lenders declined to approve a bond exchange that makes up a key part of the chain’s turnaround plan, according to a regulatory filing. The company has a 30-day grace period to come up with the payment. Claire’s also needs the European lender’s consent to get cash “to fund its near-term debt service and other obligations,” the retailer said. Claire’s has been saddled by debt it took on in Apollo’s 2007 leveraged buyout. Read more. 

Does bankruptcy still work for retail? Listen to the perspectives of bankruptcy judges and top practitioners at ABI’s Views from the Bench in Washington, D.C. on October 7. Register here. 

Claire’s Stores Inc. delayed filing its quarterly report while it tallies the results of a bond swap designed to buy time for a turnaround of the troubled tween jewelry chain, Bloomberg News reported yesterday. The retailer cited the impact of the pending exchange on its liquidity and capital resources, “as well as other aspects of its business and operations,” in a regulatory filing Wednesday. The report will be completed “as soon as practicable,” Claire’s said. Claire’s has been saddled by debt it took on in a 2007 leveraged buyout by Apollo Global Management LLC. The chain lost more than $500 million over the past three years as mall traffic slowed, competition from online and specialty stores gained momentum, and a rising U.S. dollar crimped overseas sales and profits. Chief Executive Officer Ron Marshall is trying to complete the debt swap amid the run-up to Halloween and Christmas, which were among Claire’s peak selling seasons in previous years. Read more.

Does bankruptcy still work for retail? Listen to the perspectives of bankruptcy judges and top practitioners at ABI’s Views from the Bench in Washington, D.C. on October 7. Register here. 

Golfsmith International Holdings Inc. filed for bankruptcy, hoping to reorganize or attract a buyer who can save the golf-gear retailer as the sport’s popularity fades in North America, Bloomberg News reported yesterday. Golfsmith listed debt and assets of as much as $500 million each in its chapter filing yesterday, and said that it would try to sell part of the chain as a going concern while shutting some stores. If that fails, the Austin, Texas-based company will liquidate, according to a resolution by Golfsmith directors included in the chapter 11 filing. The company blamed an aggressive plan that began in 2011 to open bigger stores that cost more to operate just as golf began to lose popularity.

A federal judge rejected a $5 million purchase offer for Bruegger’s Bagels largest franchisee, questioning in a detailed ruling whether financial professionals who put the company’s 30 locations in upstate New York into bankruptcy took competing purchase offers seriously, the Wall Street Journal reported today. Bankruptcy Judge Paul Warren in his opinion pointed out that Kevin Coyne, who runs the chain’s operations and declared a lender’s $5 million bid to be a bankruptcy auction’s winning offer, was put in power by that same lender in August 2015. Coyne took over after the franchisee fell behind on borrowing promises. After a June 28 auction, Coyne determined that the bid from lender Canal Mezzanine Partners II LP — an offer that consisted of $1.3 million and $3.7 million in forgiven debt — beat an offer from an affiliate of the Bruegger’s franchise owner itself. The bagel chain offered $4.75 million in cash. In his ruling, Judge Warren said that the lender’s bid put the company at “a very serious risk” of not having enough cash to pay legal bills and other crucial debts.