Retailers’ Repeat Bankruptcies Show Plans Falling Short

Discount shoes giant Payless could soon become the latest retailer to make a second trip to bankruptcy court in quick succession.

Last month children’s apparel retailer Gymboree filed its second Chapter 11 in two years. American Apparel, Wet Seal and Radio Shack are other prominent retailers that recently filed Chapter 11 for a second time, which bankruptcy practitioners call “Chapter 22.”

The repeat bankruptcies are a sign the original restructuring may have been rushed through too quickly or didn’t do enough to solve the retailers’ industry-wide and company-specific problems.

The number of recent Chapter 22s may also deter other retailers ...