Teen clothing retailer rue21 has filed for bankruptcy after announcing it planned to closed 400 underperforming stores.
The retailer filed a voluntary petition for reorganization under chapter 11 of the bankruptcy code in the Bankruptcy Court for the Western District of Pennsylvania. It has also entered into agreements with lenders to reduce the company’s debt.
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rue21 expects to continue normal business operations throughout the process. In April, the company started the process of closing 400 underperforming stores out of its 1,179 stores total. The goal of the retailer is to “streamline operations, better align the size of its footprint with market realities, and focus on its hundreds of highly performing locations.”
The retailer has also reached agreements, subject to the approval of the Ccourt, 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 debtor-in-possession financing.
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The new financing will allow rue21 to continue paying employees, pay vendors for authorized goods and services and honor all customer programs including gifts.
The retailer has stores in Dayton, Beavercreek, Huber Heights, Piqua and Springfield. According to the retailer’s website, none of those stores are currently impacted by the closures. One store at the Waterstone Center in Mason has already closed, and another store next to the University of Cincinnati in the U Square @ The Loop development is set to close. A third store at the Bridgewater Falls development in Hamilton will also close.
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