Bankruptcy in retail has gone from anomaly to the norm, making the question not “What if?” but “Who’s next?”

This year has already seen a bevy of mostly mall-based retailers seek bankruptcy protection, including Rue21, BCBG Max Azria, Payless, Gymboree Corp., True Religion, Gordmans Stores, Agent Provocateur and Sears Canada, which cast an even darker cloud over its struggling former parent company Sears Holdings.

Operated separately since 2012, Sears Holdings and Sears Canada are still financially entwined as the American company holds a 11.7 percent stake in the Canadian operation, while Sears Holdings chairman and chief executive officer Edward Lampert holds a 45 percent stake through his hedge fund, ESL Investments Inc.  

Bankruptcy speculation around Sears Holdings has been going on for years, but a recent report from Fitch Ratings has the company as one of the most likely retailers to default this year. The financial ratings firm admitted that such a default “could fall into 2018.”

Sears Holdings does have an interest payment on its $1.14 billion of outstanding bonds due Oct. 15.

Other retailers on Fitch’s list of likely defaults is teen accessories chain Claire’s Stores Inc., which has an interest payment coming up in September on $1.77 billion of outstanding bonds, and Nine West Holdings Inc., which also has a September payment scheduled on $705.2 million of bonds outstanding.

Claire’s and Nine West are both privately held companies backed by private equity firms Apollo Global Management and Sycamore Capital, respectively, so their financial position goes largely unexposed.

Private equity support is proving to be more of a curse than a blessing, as retailers are used as vehicles to take on more debt that doesn’t appear to be reinvested in their future.

But if you’re a company strapped for cash, private equity interest can be too good to pass up.

Vince Holdings took the private equity lifeline in May through a new deal with Sun Capital, which is already a majority stakeholder but agreed to buy at least 58 percent of a rights offering worth $30 million. Sun said it will buy the entire $30 million if need be.

One of Sun’s better known retailers The Limited, filed for bankruptcy earlier this year and subsequently liquidated.

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