rue21, a teen apparel retailer, has filed for Chapter 11 bankruptcy protection for a third time, seeking to shut down its 540 stores and sell its intellectual property.
In documents filed in Wilmington, Delaware, bankruptcy court, rue21 stated that despite attempts to sell its business, no buyer emerged willing to offer more than the potential earnings from liquidating inventory through “going out of business” sales and closing down stores.
Based in Warrendale, Pennsylvania, the retailer rue21, which has previously undergone bankruptcy proceedings in 2003 and 2017, specializes in budget-friendly fashion geared towards teens and young adults. The company currently employs around 4,900 individuals and carries a debt of $194.4 million.
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During its prime, rue21 operated 1,000 stores across malls nationwide in the United States. In its 2017 bankruptcy, the company closed approximately 400 stores as part of an agreement that enabled rue21 to reduce its debt by $700 million.
However, even after emerging from bankruptcy, the company faced ongoing challenges exacerbated by the rapid transition to online shopping, a trend further accelerated by the COVID-19 pandemic.
In 2022, rue21 aimed to secure additional capital to tackle its business obstacles, ultimately securing a $25 million investment from its current lenders. According to court documents, these lenders now hold an 80% stake in rue21’s stock.
rue21 plans to sell its brand and other intellectual property independently of its store closure proceedings. The company has enlisted Gordon Brothers to aid in the store closure sales.
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