This post is part of AOL Money & Finance's Best & Worst in Money 2008 feature.

As the economy slides into recession and struggling retailers and restaurants begin to lose the good fight, its inevitable that some favorites will disappear. Among those leaving us in 2008 are retailers Linens 'n Things, Mervyns, Sharper Image, and Steve & Barry's.

I always liked Linens 'n Things for its reasonably priced, reasonably stylish offerings of such functional things as kitchenware and linens, not to mention the occasional useless but chuckleworthy items such as dancing Santas and big plastic barrels of pretzels. But I admit that I didn't shop at the New Jersey-based big-box retailer very often. After Linens 'n Things went private in 2006, the chain's expansion was offset by declining same-store sales, and the company operated at a loss. It filed for Chapter 11 bankruptcy in May 2008, but in October said it would liquidate all remaining stores.

Being from the midwest, I've never shopped at a Mervyn's. It appears to have been a store with a bit of an identity crisis. It was acquired by Dayton Hudson in 1978. Beginning in the '80s, Mervyn's tried unsuccessfully to expand into Georgia and Florida. From 1996 to 2001, the name was changed to Mervyn's California to identify with its West Coast roots. Then in 2004 , Mervyn's was sold to private investors. Store closings became a regular occurence. In July 2008, the company filed for Chapter 11 bankruptcy. More store closings followed, and in October the company filed for Chapter 7 bankruptcy and began to liquidate its stores.

Since filing for bankruptcy in July, Mervyn's has been closing stores and fighting for survival in a much-smaller form. But now the company has announced that it will close its 149 remaining stores, with going out of business sales set to begin shortly.

In a press release, CEO John Goodman announced that "We are disappointed with this outcome but the Company's declining liquidity position and the extremely challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action."

The company was taken private by a group including Cerberus and Sun Capital back in 2004, and that deal is now the subject of considerable controversy. Last month, the bankrupt company sued its former owners, alleging that the deal was structured to separate the operations from the real estate, and that the private equity owners then proceeded to sell real estate, pay themselves dividends, jack up lease payments, and essentially transfer value from the chain to the private equity buyers.

It remains to be seen what will come of that lawsuit but, if it goes to trial, it will be an interesting case that looks at the role of private equity in the financial world.

One of the most common complaints about private equity companies (and activist investors, corporate raiders, etc.) is that their relentless focus on making a quick profit results in the looting of companies, job losses, and so on.

That theory will be tested in court: Mervyn's LLC has sued its former private-equity owners -- including Cerberus and Sun Capital -- alleging that their profiteering tactics led to the chain's bankruptcy. When the $1.26 billion deal was consummated in 2004, The Wall Street Journal reports that (subscription required) "the deal was structured as two separate transactions -- one for the retailer and a second one for the retailer's real estate. This complicated structure, the suit alleges, enriched the private-equity firms while leaving the retail operations insolvent."

The firms then sold off real estate, paid themselves dividends, jacked up lease payments, and essentially transferred value from the chain to the private equity buyers, according to the lawsuit.

This will be a must-follow case -- assuming it isn't settled quickly and confidentially -- for those looking to understand the larger effects of buyout shops. I'm skeptical of the notion that private equity firms destroy companies and, if that was indeed the case with Mervyn's, it may have been a result of the complex structure and self-dealing.

In most cases however, there is little money to be made bankrupting something for which you pay hundreds of millions -- or billions.

The New York Times reports that Bennigan's -- an "Irish-themed bar and grill" -- closed its 200 U.S. sites, throwing hundreds out of work. When you combine gasoline prices over $4 a gallon, higher food prices, and declining incomes, people change their economic behavior. That is particularly true when people can no longer use the equity in their homes to cover the gap between what they want and what they can afford.

In April, I posted on the recession diet, which is the way that consumers are coping with the squeeze on their budgets. They have staycations, they don't drive to or shop at the mall, they eat at home, and they buy more pasta and consume fewer vegetables and steaks.

It's great news that gasoline prices have come down recently -- in some cases as much as 20 cents a gallon. But it's not clear whether that will be enough. In any case, the Times provides a nice list of those restaurants and retailers that have filed for bankruptcy in the wake of the recession diet:

• Bennigan's
• Steak & Ale
• Mervyn's, mid-tier department store chain
• Steve & Barry's, a fashion retailer
• Linens 'n Things
• Sharper Image

I think there will be more such bankruptcies and I plan to look at publicly traded companies in these industries to see which are the likeliest candidates. If you have ideas you'd like to analyze, please post your thoughts below.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

It's been a brutal time for retailers. Some of the bankruptcies include: Linens 'n Things, Goody's Discount Clothing and Sharper Image.

According to a report in the Wall Street Journal [subscription required], it looks like Mervyn's LLC is also in trouble and may even shut down this month as a variety vendors are stopping shipments. There are also issues with financing from CIT Group Inc
(NYSE: CIT).

Founded in 1949, Mervyn's is a low-priced retailer that's focused on young families. The typical store has 80,000 retail square feet. While there are 177 stores, they are concentrated in seven states, with a big concentration in California and Arizona -- both have suffered greatly from the real estate bust.

Back in 2004, a group of private equity firms, Sun Capital Partners Inc, Cerberus Capital Management, Lubert-Adler and Klaff Partners LP, purchased Mervyn's for about $1.2 billion, of which $400 million was in equity.

Are these folks suffering? Perhaps not. You see, the investors wanted to capitalize on Mervyn's real estate. As a result, the investment was structured into two sections. So while the retail component has lagged (and there has been lots of restructuring), the real estate component has done quite well.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.