[4] The chain peaked in size at 119 stores in 1970, by which time the company began experiencing heavy operating losses.

The losses would later be attributed, in part, to an expansion strategy that was too geographically diverse for the chain's size, leading to inefficient distribution.

[6][7][8] An ambitious plan to revive sales during the Christmas 1973 season, called "Mission Impossible" by company insiders and executed without disclosure to, or approval of, the court, failed to turn the chain's fortunes around and an additional 38 stores closed by January 1974.

The Securities and Exchange Commission successfully petitioned the court to have the bankruptcy converted to Chapter 10.

Subsequent court rulings would document various unethical practices by Arlan's legal representatives, regarding fees and a lack of candor.