Rue21, once a popular retailer that graced the malls with its presence, has filed for Chapter 11 bankruptcy protection. This is the third time the company has sought this form of financial assistance, and it seems like things are not improving. Rue21 plans to close all its stores and sell off all its intellectual property after struggling to continue operating. The company currently has around 540 stores across the U.S.
Court documents filed in the U.S. Bankruptcy Court in the District of Delaware reveal that Rue21 will be implementing “going out of business” sales in its stores. Despite attempts to sell its business, the company did not secure a buyer willing to pay more than what it would earn by liquidating its inventory. Rue21’s debt has accumulated to approximately $194.4 million.
The spike in corporate bankruptcies in the U.S. last year was significant, with filings jumping from 179 in 2023 to 282 in 2023, according to Debtwire’s latest Restructuring Insights report. Catherine Corey, Debtwire’s global head of restructuring data, stated that this increase indicates a shift in lenders’ attitudes as they are becoming less willing to support struggling companies due to various challenges such as post-pandemic withdrawal of government support, inflation, rising interest rates, supply chain disruptions, global unrest and stricter lending requirements.
