RETAILERS TAKING STEPS TO AVOID BANKRUPTCY

Sharper Image and Levitz Furniture have declared bankruptcy recently and many more retailers such as Zales, Foot Locker, and Ann Taylor are taking steps to try to avoid it.

From The New York Times:

The consumer spending slump and tightening credit markets are unleashing a widening wave of bankruptcies in American retailing, prompting thousands of store closings that are expected to remake suburban malls and downtown shopping districts across the country.

Since last fall, eight mostly midsize chains — as diverse as the furniture store Levitz and the electronics seller Sharper Image — have filed for bankruptcy protection as they staggered under mounting debt and declining sales.

But the troubles are quickly spreading to bigger national companies, like Linens ‘n Things, the bedding and furniture retailer with 500 stores in 47 states. It may file for bankruptcy as early as this week, according to people briefed on the matter.

Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117, and the jeweler Zales will close 100.

Whether more chains file for bankruptcy or not, it will be hard to miss the impact of the industry’s troubles in the nation’s malls.

J. C. Penney, Lowe’s and Office Depot are scaling back or delaying expansion. Office Depot had planned to open 150 stores this year; now it will open 75.

The International Council of Shopping Centers, a trade group, estimates there will be 5,770 store closings in 2008, up 25 percent from 2007, when there were 4,603.

Charming Shoppes, which owns the women’s clothing retailers Lane Bryant and Fashion Bug, is closing at least 150 stores. Wilsons the Leather Experts will close 158. And Pacific Sunwear is shutting a 153-store chain called Demo.

SHARPER IMAGE FILES FOR CHAPTER 11 BANKRUPTCY PROTECTION

Sharper Image filed for chapter 11 bankruptcy protection late Tuesday. The filing is an effort by the company to continue operations while renegotiating with creditors and likely restructuring the company to emerge as a healthy business. The filing indicates that the company has $251.5 million in assets, $199 million in debts, and $700,000 cash on hand.

From USA Today:

Sharper Image is in a severe liquidity crisis," Chief Financial Officer Rebecca Roedell said in a separate filing.

She said the company has suffered from increased competition, narrowing margins, litigation, lower consumer and market confidence, tighter credit from suppliers, and poorly performing stores. "The foregoing has been compounded by the ever-tightening and volatile credit and financing markets," she added.

Sharper Image has seen its sales decline steadily since 2004, and it has posted net losses in fiscal 2005, 2006, and 2007.

TOPPS MEAT FILES CHAPTER 7 LIQUIDATION BANKRUPTCY

From USA Today:

Topps Meat, which issued the nation's second-largest beef recall ever, has filed papers to liquidate the company.

Topps was one of the largest makers of frozen hamburgers before potentially fatal bacteria were found in its patties, compelling it to halt production and issue the recall on Sept. 29.

Six days later Topps said it was closing its business, after it was forced to issue the recall of 21.7 million pounds of frozen hamburger, which is one year's worth of production.

In September, the USDA said three people were confirmed as getting E. coli from Topps products, with 22 other cases under investigation. Cases were found in Connecticut, Florida, Indiana, Maine, New Jersey, New York, Ohio and Pennsylvania.

Topps has up to 10,000 creditors and liabilities of $1 million to $100 million, according to its Chapter 7 filing in U.S. Bankruptcy Court in Newark. The company put its assets in the same range.

Topps recalled a year's worth of production — 21.7 million pounds of frozen hamburgers — after some meat was found contaminated with E. coli O157:H7, a potentially fatal bacteria. To date, 40 people in eight states have been sickened after eating Topps beef, the Centers for Disease Control said.

In late October, the USDA said a now-defunct Canadian firm, Rancher's Beef of Balzac, Alberta, was the likely source of bacteria-contaminated meat used by Topps.

The recall prompted the USDA to announce changes in how it will inspect meat plants. After being criticized for foot-dragging, the USDA also said it would move faster to encourage recalls. The agency cannot issue recalls.

Topps burgers contained at least three versions of the O157:H7 strain of E. coli bacteria, which can be fatal to humans. The strain is harbored in the intestines of cattle and can also get on their hides. Improper butchering and processing can cause the E. coli to get onto meat. Thorough cooking, to at least 160 degrees internal temperature, can destroy the bacteria.

NEUMANN HOMES FILES FOR BANKRUPTCY

From the Chicago Sun-Times:

The crash in the Chicago area market for new homes has claimed its biggest casualty. Suburban builder Neumann Homes Inc. said Monday it will file for bankruptcy and has laid off most of its employees.

Warrenville-based Neumann, the Chicago area's ninth largest builder, blamed its predicament on a drop of more than 50 percent in annual sales within the Chicago and Denver markets. It also pointed to a decision in 2005 to invest in the Detroit market, a move it said cost the company more than $60 million.

Neumann said it will file for Chapter 11 bankruptcy and that its lenders have agreed to provide limited additional funding so that its assets can be evaluated and sold.

It also said the earnest money of customers whose new homes haven't started construction is safe in escrow. Neumann said it will ask a bankruptcy judge to approve refunds from those accounts.

It also said it will work with lenders to ensure that homes will be completed if construction has started.

BALLY TOTAL FITNESS TO SEEK CHAPTER 11 BANKRUPTCY PROTECTION?

Shares of Chicago-based Bally Total Fitness sank 60% in trading today as the company announced it may file for Chapter 11 reorganization soon. The company has $827 million in outstanding debt with $300 million more coming due in October and only $45 million in cash.

AP at Yahoo!

NORTHWEST AIRLINES FILES REORGANIZATION PLAN

Northwest Airlines filed its plan for emerging from Chapter 11 bankruptcy on Thursday. The company filed for bankruptcy protection in September of 2005 and has eliminated $2.4 billion in annual operating costs, $1.35 billion coming from labor concessions. According to the plan, unsecured creditors are expected to receive between 66% and 83% of the value of their claims against the company.

USA Today