Gymboree has filed for Chapter 11 bankruptcy protection.
The children's clothing retailer announced the move Monday morning, only a few weeks after it partnered with a turnaround firm, AlixPartners, to assist with its operations and then missed a June 1 debt payment.
A bankruptcy filing had been seen as imminent, with S&P Global lowering its corporate credit rating on the company to "D" from "CC."
San Francisco-based Gymboree also announced Monday the departure of Chief Financial Officer Andrew North, who is leaving for personal reasons.
"The steps we are taking today allow the Company to definitively address its debt and enable the management team to turn its full focus toward executing our key strategies, including our Product, Brand and Omni-channel initiatives," CEO Daniel Griesemer said in a statement. "We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today's evolving retail landscape."
James Mesterharm, Gymboree's chief restructuring officer, said in a court filing that the retailer was hurt by lower-cost competition from rivals Children's Place and Gap, both of which have less debt financing.
In conjunction with its latest filing with the Securities and Exchange Commission, Gymboree said it has secured commitments for up to $308.5 million in additional financing.
The Chapter 11 filing should reduce Gymboree's debts by more than $900 million, the company added, and it will shutter some 375 stores, according to court filings. Gymboree said 35 percent of its 1,300 stores are leased from real estate investment trusts, or REITs, GGP and Simon Property Group.
Its Gymboree-, Janie and Jack- and Crazy 8-braded stores tend to be located in malls, where weakening foot traffic has been hurting numerous specialty apparel tenants and department stores alike lately.
Gymboree said it expects to operate its overall business and the "majority of its stores" as usual during its financial restructuring and has made plans to pay its vendors for all goods and services delivered on or after June 11, 2017.
A director at AlixPartners, Liyuan Woo, will serve as interim CFO.
Kirkland & Ellis is the company's legal counsel, AlixPartners is serving as its financial advisor and Lazard is its investment bank throughout this process.
Gymboree's Chapter 11 petition was filed in the U.S. Bankruptcy Court for the Eastern District of Virginia.
— Reuters contributed to this report.