The teen specialty retailer rue21’s reorganization plan has been approved by U.S. Bankruptcy Court for the Western District of Pennsylvania, clearing the way for the company to emerge from bankruptcy less than four months after filing a Chapter 11 petition.
The company currently operates 758 stores in 45 states in shopping malls, outlets, and strip centers, as well as online at rue21.com. It originally had 1,179 stores in 48 states and began closing 400 unprofitable locations in May.
“Today’s confirmation represents an important step forward in rue21’s ongoing business transformation to a sustainable business model for a highly performing retailer,” Melanie Cox, chief executive officer, said in a statement Monday. “We are very pleased to have moved through the restructuring process in a relatively short period.”
Cox added: “Rue21 can now move forward from a position of renewed strength, with a highly relevant brand, an enthusiastic and loyal customer base, hundreds of highly performing stores, and a rapidly growing e-commerce business supported by strong vendor relationships and terms that are trending well above plan.”
The company, headquartered just north of Pittsburgh, expects the plan of reorganization to become effective by Thursday.
There are several rue21 stores in this region, including in Northeast Philadelphia, Exton, Pottstown, and Quakertown in Pennsylvania; Cinnaminson, Vineland, and Mays Landing in South Jersey; and Wilmington.
In its May 15 Chapter 11 filing, rue21 estimated assets and liabilities at between $1 billion and $10 billion each. Wells Fargo was listed as the largest unsecured creditor, with a claim of $239.2 million in senior unsecured notes that would have come due in 2021.
“These actions are being undertaken with the goal of strengthening the company’s balance sheet, achieving a more efficient cost structure and concentrating resources on a tighter retail footprint in order to pave the best path forward for rue21,” Cox said in a statement in May. “… The agreement with our lenders represents their confidence in rue21’s future success even at a time of significant retail industry change.”