Ross County – rue21, the teen apparel retailer based in Warrendale, Pennsylvania, has filed for Chapter 11 bankruptcy for the third time, signaling the closure of all its remaining 540 stores.
The company, which has been grappling with financial difficulties for years, made the decision to close its stores and sell its intellectual property in an effort to mitigate its ongoing financial challenges. rue21 had previously filed for bankruptcy in 2003 and 2017.
Court documents filed in Delaware bankruptcy court revealed that rue21 had explored options to sell its business, but no potential buyer was willing to offer as much as the company could earn through liquidating its assets, including conducting “going out of business” sales and shuttering stores.
The COVID-19 pandemic exacerbated the situation for rue21, with the shift to online shopping leading to a decline in foot traffic and sales at its brick-and-mortar locations. To adapt to the changing market landscape, the company received a $25 million investment from existing lenders. However, as a result of the bankruptcy proceedings, those lenders now hold an 80% stake in rue21.
Currently, rue21 employs approximately 4,900 workers and carries a debt of $194.4 million. The closures will affect multiple locations across Ohio, including those in Chillicothe, Cincinnati, Columbus, Dayton, Lima, Toledo, and various other cities.
The list of stores includes Chillicothe and Lancaster that are closing and liquidating.
The bankruptcy filing marks a significant turning point for rue21, which once boasted a significant presence in the teen retail market. The company’s closure underscores the challenges facing traditional brick-and-mortar retailers in an increasingly digital marketplace.
Further developments regarding the bankruptcy proceedings and store closures may follow as rue21 navigates through this challenging period.
