Rue21 Inc. (“Rue21”) filed for Chapter 11 bankruptcy protection in Pittsburgh, PA on Monday (case no. 17-22045-GLT, Western District of Pennsylvania).
This was another bankruptcy filing I saw coming back in January, when I wrote my blog Retailers to Watch for Possible Bankruptcy Filings in 2017. In the bankruptcy petition, the teen fashion retail chain lists more than 1,100 stores in the U.S. and assets and liabilities in the range of $1 billion and $10 billion.
In pre-bankruptcy planning, Rue21 scheduled 400 store closures and entered into a Restructuring Support Agreement, where it expects to continue normal operations throughout the Chapter 11 process. The company could increase the store closures as it evaluates its standing in the bankruptcy case, according to CNBC. The company also reached agreements to obtain up to $125 million in debtor-in-possession (DIP) financing from existing lenders, and up to $50 million in new money term loan DIP financing from a group of its existing term loan lenders, according to Reuters.
The company’s problems stem from high debt of nearly $1 billion, declining foot traffic and generational shopping shifts. Rue21 is the latest in a long line of teen fashion retailers, who have filed for bankruptcy protection. Others include, PacSun and Wet Seal.
If you are a landlord with a Rue21 it is important to know your rights, now.