Rue21, a struggling 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 failing 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., but attempts to sell its business did not result in a buyer willing to pay more than what it would earn by liquidating inventory. The company has accumulated approximately $194.4 million in debt, making it one of many companies facing financial troubles in the U.S., with bankruptcy filings jumping 58% from 179 in 2023 to 282 in 2024, according to Debtwire’s latest Restructuring Insights report.
The spike in bankruptcies 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 this trend is likely to continue as economic conditions become increasingly challenging for many businesses and individuals alike.
