By Dietrich Knauth
NEW YORK (Reuters) - Teen apparel retailer rue21 filed for Chapter 11 bankruptcy protection for a third time on Thursday, seeking to shut down its 540 stores and sell its intellectual property.
rue21 has attempted to sell its business, but no buyer appeared willing to pay more than the company would earn by liquidating its inventory in "going out of business" sales and shutting down its stores, the company said in documents filed in Wilmington, Delaware, bankruptcy court.
The Warrendale, Pennsylvania-based retailer, which previously filed for bankruptcy in 2003 and 2017, focuses on affordable fashion for teens and young adults. rue21 has approximately 4,900 employees and $194.4 million in debt.
At its peak, it had 1,000 stores in malls throughout the U.S. The company closed about 400 stores during its 2017 bankruptcy, in a deal that allowed rue21 to slash $700 million in debt.
But the company continued to struggle after emerging from bankruptcy, hit hard by a shift to online shopping that was accelerated by the COVID-19 pandemic.
rue21 sought to raise more capital to address those business challenges in 2022, ultimately getting a $25 million investment from its existing lenders. Those lenders now own 80% of rue21's stock, according to court filings.
rue21 intends to sell its brand and other intellectual property separately from its store closing sales. The company has hired Gordon Brothers to assist with the store closing sales.