Rue21, a troubled retailer that was once a mall staple, 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 U.S.
Reuters reported that Rue21 attempted to sell its business but did not secure a buyer willing to pay more than what the company would earn by liquidating its inventory. The company has accumulated approximately $194.4 million in debt. Rue21 first filed for bankruptcy protection in 2003, followed by a second time in 2017, during which it closed 400 stores and reduced its debt by $700 million.
Rue21 is not the only company facing financial troubles. Corporate bankruptcies in the U.S. saw a significant increase last year, with bankruptcy filings jumping 58% from 179 in 2022 to 282 in 2023, according to Debtwire’s latest Restructuring Insights report. Catherine Corey, Debtwire’s global head of restructuring data, stated that 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 the post-pandemic withdrawal of government support, inflation, rising interest rates, supply chain disruptions, global unrest, and stricter lending requirements.