Rochelle Park, N.J. -- United Retail Group Inc. announced that it has filed for Chapter 11 bankruptcy court protection as it looks to sell itself to private-equity firm Versa Capital Management. United Retail owns the 433-store Avenue chain, which specializes in plus-sized women’s apparel.
“We are seeking relief from disproportionately high costs for many of our leases that were signed prior to the recession,” United Retail CEO said in the statement. “Through Chapter 11 relief and a lease renegotiation process, the turnaround of Avenue can continue.”
The retailer signed an asset purchase agreement with an entity controlled by Versa Capital, which it plans to submit to the bankruptcy court as the stalking horse bid for a court-supervised auction of the business. Versa has agreed to buy inventory, a distribution facility in Ohio, and leases for at least 300 stores, subject to higher bids in the Chapter 11 process.
United Retail has begun closing 14 stores, and has identified 100 "chronically underperforming" stores where it hopes to get out of or renegotiate its leases, according to Reuters.
United Retail is a subsidiary of Redcats USA, owned by Paris-based retail conglomerate PPR SA.
“This sale was part of a strategic decision by Redcats USA to focus its business online moving forward, and we are pleased to have found a company that can continue the turn-around process we envisioned from the beginning,” said John Heaney, executive VP of Redcats USA.
United Retail listed assets of $117.2 million and debt of $67.3 million in documents filed in U.S. Bankruptcy Court in Manhattan. It has arranged for a $40 million debtor-in-possession credit facility from its existing revolving credit lender, Wells Fargo & Co. to provide sufficient capital for Avenue stores to continue its operations as usual.