- Rue21 filed for Chapter 11 bankruptcy protection Monday in a Pennsylvania court.
- The retail chain has listed its assets and liabilities in the range of $1 billion and $10 billion, according to Monday's court filing.
- Rue21 has warned that it could evaluate additional store closures now.
Another retailer is struggling to stay afloat.
This time, it's teen clothing company Rue21, which filed for Chapter 11 bankruptcy protection Monday in a Pennsylvania court.
"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," CEO Melanie Cox wrote in a statement.
Rue21 said it has entered into agreements with some of its lenders to reduce its debt and to provide additional capital in support of its restructuring, according to a release, but the company expects to continue normal business operations throughout the process.
The retail chain, which operates more than 1,100 stores, has listed its assets and liabilities in the range of $1 billion and $10 billion, according to Monday's court filing.
"The restructuring is an important step forward in rue21's ongoing business transformation into a more focused and highly performing retailer," the company added in a statement.
Rue21 also warned that it could evaluate additional store closures now, in addition to the already-planned 400 closures that began in April.
The retailer said it has reached agreements to obtain up to $125 million in debtor-in-possession (DIP) 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 new financing will support day-to-day operations during the reorganization, Rue21 explained, such as paying employee wages, fulfilling agreements with vendors and honoring existing customer programs like gift cards.
"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," CEO Cox remarked.
Rue21 adds to a long list of retailers that have filed for bankruptcy of late, as it becomes more difficult for brick-and-mortar locations to draw customers in, with more shoppers opting to spend money online.
In April, for example, discount shoe retailer Payless ShoeSource filed for bankruptcy.
Kirkland & Ellis will serve as Rue21's legal advisor. Rothschild will be its investment banker and financial advisor. Berkeley Research Group is Rue21's restructuring advisor during this process, the company said.