U.S. teen fashion retailer Rue21 Inc filed for Chapter 11 protection on Monday in the Western District of Pennsylvania bankruptcy court.
The retail chain, which sells budget-priced clothing and accessories at over 1,100 stores across the United States, listed assets and liabilities in the range of $1 billion and $10 billion, according to the court filing.
Rue21 has entered into a Restructuring Support Agreement with certain stakeholders and expects to continue normal operations throughout the Chapter 11 process, it said in a statement late Monday.
It has 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.
Rue21 said the new financing “will support day-to-day operations during the reorganization”, adding that they may evaluate additional store closures, apart from the planned 400 store closures it began last month.
The retailer, reeling under debt and declining foot traffic, is struggling to repay a debt load of nearly $1 billion. Much of that debt stems from a $1.1 billion leveraged buyout by private equity firm Apax Partners LLP in 2013.
Rue21 is the latest in a long line of retailers filing for bankruptcy as shoppers shift their spending online. In April, discount shoe retailer Payless ShoeSource filed for bankruptcy and planned immediate closures of 400 of its over 4,000 stores worldwide.