For the third time, Teen clothing retailer rue21 has filed for Chapter 11 bankruptcy protection as the company aims to close all 540 of its stores and offload its intellectual property.
Despite efforts to find a buyer for its business, rue21 found no takers willing to offer more than what could be gained through liquidating inventory in ‘going out of business sales and shuttering its stores, as stated in court documents filed in Wilmington, Delaware.
Based in Warrendale, Pennsylvania, rue21 specialises in affordable fashion for teenagers and young adults. With approximately 4,900 employees and $194.4 million in debt, the company's struggles are evident.
Once boasting 1,000 stores across US malls at its peak, rue21 had to close around 400 stores during its 2017 bankruptcy, which helped it reduce $700 million in debt. However, the company continued to grapple with challenges post-bankruptcy, particularly with the surge in online shopping exacerbated by the COVID-19 pandemic.
In 2022, rue21 sought additional capital to address these issues, securing a $25 million investment from its existing lenders. As a result, these lenders now hold an 80 per cent stake in the company.
Moving forward, rue21 plans to sell its brand and intellectual property separately from its store closure proceedings. Gordon Brothers has been enlisted to assist with the liquidation sales.
