("rue21" or the "Company"), a leading teen specialty apparel retailer, today announced it has filed a voluntary petition for reorganization under chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Western District of Pennsylvania, and has entered into agreements with certain of its lenders to reduce the Company's debt and provide additional capital in support of its restructuring.
The growth of ecommerce, as well as competition from European rivals such as H&M and Zara, are often blamed for brick-and-mortar chains' troubles.
But the privately held retailer is not bleeding cash, and it secured support for its debt-cutting plan from multiple key creditors.
The Warrendale, Pa. -based retailer, founded more than 37 years ago, said that it needed bankruptcy in part to reestablish normal deals with vendors that had begun to demand cash on delivery in exchange for products amid talk of a possible restructuring process. With debt of nearly $1 billion, the retailer has struggled to make its debt payments as demand for its clothing declines.
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The first three months of 2017 have seen a record number of store closings, and the trend's not likely to reverse anytime soon. PE executives then direct management to make strategic and operational changes in order to boost a business' performance.
The company did not immediately return an email from CNNMoney asking about layoffs. That can leave already struggling businesses swimming in red ink, hindering their recovery - or pushing them into insolvency. As for teen retailer Rue21, it looks like not all store locations will close. Operators of brick-and-mortar stores have been hit by declining traffic as consumers shift to online shopping and fast-fashion competitors. The firm expects the high yield retail default rate to end 2017 at 9%, with more than $4 billion defaults.
The company previously had a store in the former Martinsburg Mall. Gorman said. "There's no real solution".
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