Mervyn's LLC, the California mid-tier department-store chain, may be forced to file for Chapter 11 bankruptcy protection as some of its vendors have halted shipments to the company and key lenders have pulled financing, according to published reports. The Wall Street Journal said that in the spring Mervyn's lender CIT Group Inc. stopped providing financing to the chain. This caused Mervyn's vendors to get nervous, and many began withholding shipments to the company.


 


The paper said that Mervyn's executives in recent weeks have been trying to persuade vendors to ship merchandise to the retailer for the crucial back-to-school season to avoid a bankruptcy filing.


 


Two retail experts familiar with the bankruptcy planning at Mervyn's said the retailer's sales began to tumble quickly as the real-estate slide began in California and Arizona. Mervyn's tried to cater to Hispanic consumers, many of whom have been hurt by the downturn and job losses in the mortgage and home-building industries.


 


The private-equity owners of Mervyn's have shut many stores since 2004. Mervyn's operates 177 stores in seven states, mostly in California.


 


Private-equity firms Cerberus Capital Management and Sun Capital Partners, along with three other partners — including real-estate investor Lubert-Adler — acquired the chain from Target Corp. in 2004 for $1.2 billion. The group put up about $400 million in equity and financed the rest.