Teen apparel retailer files for bankruptcy protection
A month after it announced it would close 400 stores, the other shoe has dropped at Rue 21.
The Warrendale, Pennsylvania-based retailer announced it has filed for Chapter 11 bankruptcy protection and entered into agreements with some of its lenders to reduce the company's debt and provide additional capital in support of its restructuring. The company, which expects to continue normal business operations throughout the process, listed its assets and liabilities in the range of $1 billion and $10 billion, according to its court filing.
In April, Rue 21 said it would close about 400 underperforming stores in its 1,179 store fleet in order to streamline operations, better align the size of its footprint with market realities, and focus on its best locations. The company warned on Monday it may evaluate additional store closings as it continues to manage its real estate lease portfolio.
"These actions are being undertaken with the goal of strengthening the company's balance sheet, achieving a more efficient cost structure, and concentrating resources on a tighter retail footprint in order to pave the best path forward for rue21, said CEO Melanie Cox. “Even in a challenging environment, we are fortunate that rue21 has highly relevant brands, an enthusiastic and loyal customer base, and hundreds of highly performing stores.”
The retailer said it has reached agreements to obtain up to $125 million in debtor-in-possession financing from its existing lenders, and up to $50 million in new money term loan DIP financing from a group of its existing term loan lenders.
“The agreement with our lenders represents their confidence in Rue21's future success even at a time of significant retail industry change,” Cox said. “Looking ahead, I am confident that the outcome of this process will be a stronger and more sustainable Rue21 for our customers, vendors and business partners.”
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