Jan 6 (Reuters) - Apparel retailer Goody's Family Clothing will hold an auction to liquidate the chain early next week, the New York Post said, citing sources.

Goody's Family formalwear

The Knoxville, Tennessee-based retailer, which reorganised its business in October after spending four months under Chapter 11 bankruptcy protection, is being forced into liquidation by skittish lenders despite weeks of talks to keep the chain alive, the paper said, citing sources.

The retailer filed for bankruptcy protection on June 9, saying it had been hurt by high gasoline and food prices that had forced consumers to cut back on nonessential purchases.

The paper said the chain's demise is another blemish on the reputation of its owner, Prentice Capital, which also owns bankrupt retailers KB Toys and Whitehall Jewelers (WHJHQ.PK), and held a stake in now-defunct Steve & Barry's.

Prentice Capital and Goody's could not be immediately reached by Reuters for comment. (Reporting by Ratul Ray Chaudhuri in Bangalore; editing by Simon Jessop)