P.M. BRIEFING : Ames Likely to File Chapter 11

Ames Department Stores Inc. has hired a bankruptcy specialist from a prominent New York law firm, fueling speculation that the retailer will file for protection from its creditors under the federal bankruptcy code, according to a published report.

A story in today’s editions of the Hartford Courant said Ames has hired Michael Cook of Skadden, Arps, Slate, Meagher & Flom to begin preparing paper work for a Chapter 11 filing, which would allow Ames to continue operating while trying to work out a plan to repay its debts.

Ames, which has been suffering from major losses and cash flow shortages since its 1988 acquisition of the Zayre discount chain, has been trying for weeks to negotiate new financing with its bankers. Most of its stores are in the Northeast, where the retail environment is sluggish.