As a sign of how disconnected one can be, I had to ask my 12-year old about Steve & Barry's. I had not heard of it and it is receiving way too many comments on our site to be ignored. My colleague Zac Bissonnette started blogging about it a month ago Steve & Barry's on the brink of bankruptcy? and the comments are still coming in strong as the story progressed.

Steve & Barry's filed for Chapter 11 bankruptcy on July 9, 2008, and information about its status and answers to frequently asked questions can be found here.

The company has been expanding rapidly and clearly hit a brick wall with consumer budgets severely strained and the economy facing uncertainty in the short term. However, this is supposed to be a discount chain. Perhaps the discounting amounted to selling dollars for ninety cents, and it could not make it up on volume.

This is a relatively small company, but clearly it matters to a lot of people. The number of comments we have received has surpassed most of our recent stories, even those of the Bear Stearns takeover (acquired by JPMorgan Chase (NYSE: JPM)) and the IndyMac (NYSE: IDMC) collapse.

Steve & Barry's might have had an IPO sometime in its future, but that is not likely in the current environment. What is it that makes this story so compelling to our readers? If it is because the stores are so great, what went wrong in your neighborhood?

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of any of JPM.

In a blow to bargain shoppers that would have been unthinkable just a few weeks ago, uber-fast growing discount apparel retailer Steve & Barry's is preparing to file for bankruptcy, according to The New York Times. The company has grown rapidly with its 50,000-100,000 square foot stores offering extremely cheap clothing aimed at college students: NBA-star endorsed basketball shoes for $8.98 (Starbury's, shown right), clothing lines endorsed by Venus Williams and Amanda Bynes, and a Sarah Jessica Parker line as well.

The company is reportedly discussing a possible deal with Sears Holdings (NYSE: SHLD), but that company isn't in such great shape either. Steve & Barry's debt load appears to be making a sale impossible without the benefit of a bankruptcy filing.

It's been a rapid fall from grace -- not so long ago, the company was the darling of mall operators looking to fill vacant big box locations. They lured Steve & Barry's with large upfront payments that kept the cash flowing for awhile. But once those were exhausted, the stores weren't profitable enough on their own.

I hold out hope for this company; it's a fantastic idea and, in some form, I think it will live on. It's my hope that at least some of the stores can be salvaged, and if not, there's always the internet. Because of its focus on retail growth, Steve and Barry's currently has no e-commerce site -- none. If someone is able to acquire this one off the bankruptcy scrapheap, I would expect that to change.

Back on June 21st, I wrote about Steve & Barry's rapid descent into a serious financial mess. The retailer that has grown to $1 billion in sales on the strength of decent quality, celebrity-endorsed clothing at ridiculously low prices ($8 basketball shoes!) reportedly needed cash badly to avoid bankruptcy.

Today The Wall Street Journal reports (subscription required) that the company is preparing a bankruptcy filing as it desperately seeks at least another $20 million in emergency financing. The company reportedly is set to close 100 stores and, if things don't improve, could go into an all-out liquidation, spelling the effective end of the company.

Now I'm being facetious here, but follow my logic: with election-year politics leading elected officials to consider bills that would provide billions in taxpayer funds to help bailout people who lied on loan applications to buy homes they couldn't afford, is providing $20 or $30 million to help Steve & Barry's stay afloat really so crazy? I mean-- and it will never happen -- but I would argue that it's a company whose survival would do a lot more to help hard-working families than helping Las Vegas speculators keep their McMansions. I'll say it again: $8 basketball shoes.

I'm really hoping that things will work out for Stever & Barry's. The death of this company would be a great loss. Perhaps Warren Buffett could serve as a white knight -- we want out $8 basketball shoes!

This one really caught me off-guard: Steve & Barry's, the college-town apparel retailer known for selling decent-quality, reasonably fashionable apparel, all at prices under $10, is said to be on the brink of bankruptcy, searching desperately for $30 million to keep the company going through 2008.

It's surprising because, in the past month alone, the discounter has opened nine new stores, bringing the total up to 270. According to The Wall Street Journal (subscription required), the company had been booking a large chunk of its profits from one-time, up-front payments made by mall operators seeking to fill vacant big-box spaces. After those payments, many of the stores are only marginally profitable.

Steve & Barry's had established a niche with ultra low-priced goods, many of which bear the endorsements of celebrities including Sarah Jessica Parker and Amanda Bynes, and athletes like Bubba Watson, Venus Williams, and Stephon Marbury.

Its cash crisis aside, I'll be shocked -- and disappointed -- if Steve & Barry's disappears anytime soon. It would seem to be a strong strategic acquisition target for a number of companies, especially anyone looking to reach out to cash-strapped consumers struggling with high gas prices. $8.88 NBA-player endorsed basketball shoes would seem to be pretty recession-proof. Wal-Mart (NYSE: WMT) could probably do great things with the company. Raising cash through an initial public offering also can't be ruled out.

Steve & Barry's appears to be (yet another) victim of overly aggressive expansion and hubris, but the concept remains strong, and I think it will be around for a long time.