The specialty fashion retailer “rue21” has declared bankruptcy and is in the process of liquidating its assets through store clearance sales. The company filed for Chapter 11 bankruptcy in Delaware due to operational losses from various factors such as underperforming retail locations, online shopping growth, competition, inflation, and difficulty in raising capital.
With headquarters in Warrendale, Pennsylvania, rue21 operated over 540 stores across the U.S., all of which are set to close. After exploring restructuring options, the company decided to liquidate its assets and sought bids from consultants to manage the store closures and asset liquidation. Global advisory firm Gordon Brothers Retail Partners was chosen for this task.
Assets not sold during store clearance sales will be put up for bidding, including intellectual property. Rue21 plans to enter into a “stalking horse purchase agreement” to ensure maximum value for these assets. The company anticipates the store closing sales to conclude within the next four to six weeks.
Despite facing challenges in processing payroll for terminated employees in compliance with state regulations, rue21 aims to pay wages as promptly as possible. The company, which employs over 10,000 individuals, estimates its assets to be in the range of $100 to $500 million, with corresponding liabilities.
The company’s website is currently inaccessible, but a recent Instagram post announced a “going out of business” sale with discounts of 30-50 percent. Rue21 joins a list of fashion retailers filing for bankruptcy this year, including Express Inc., Joann, and The Body Shop.
Overall commercial bankruptcies have increased by 22 percent in the first quarter of 2024 compared to the same period in 2023, with Chapter 11 bankruptcies rising by 43 percent. Factors contributing to this trend include higher costs, reduced consumer spending, and economic uncertainties.
Data from S&P Global shows a rise in corporate bankruptcies, with 142 filings in 2024 as of March. The consumer discretionary and healthcare sectors have seen the most bankruptcies, with California leading in filings. The trend is expected to continue throughout the year due to economic challenges and borrowing pressures. Please rewrite this sentence.
Source link
