Rue21, once a popular retailer in malls across the US, has filed for Chapter 11 bankruptcy protection. The company plans to close all its stores and sell all its intellectual property after struggling to continue operating. This marks the third time Rue21 has filed for bankruptcy. According to court documents filed in the U.S. Bankruptcy Court in the District of Delaware, the company will be implementing “going out of business” sales in its stores. Rue21 currently has about 540 stores across the US.
The company attempted to sell its business but did not secure a buyer willing to pay more than what it would earn by liquidating its inventory, Reuters reported. Rue21 has accumulated approximately $194.4 million in debt. The spike in bankruptcies in 2023 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. Catherine Corey, Debtwire’s global head of restructuring data stated that corporate bankruptcies in the US saw a significant increase last year with bankruptcy filings jumping 58% from 179 in 2023 to 282 in 2023 indicating that lenders are becoming more cautious about extending credit and providing financial support to companies facing financial difficulties
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