Rue21 Inc., a teen clothing chain with 37 stores in Indiana, is preparing to file for bankruptcy, according to people familiar with the matter.
A filing could come as soon as this month, said the people, who asked not to be identified because the process isn’t public. As it negotiates with lenders, the company has a forbearance agreement in place that lasts through late April.
Rue21 operates nine stores in the Indianapolis area — at Castleton Square, Southern Plaza, Centre West, Hamilton Town Center, Greenfield Crossing, Brownsburg Station, Speedway Super Center, Plainfield Commons and Greenwood Park Mall.
Like many retailers, the Warrendale, Pennsylvania-based chain has seen a falloff in mall traffic. Private equity firm Apax Partners bought the company, which operates more than 1,000 stores, for about $1 billion in 2013. It sells young men’s and women’s clothing, makeup and accessories, including the Ruebleu swimwear line.
“Rue21 has been working to improve its operations and enhance its liquidity position and has been actively engaged with its lenders and bondholders to explore the best path forward,” the retailer said in a written statement.
The filing would continue a tumultuous year for U.S. retail, with numerous chains seeking bankruptcy protection and others closing huge swaths of stores. Payless Inc., the discount shoe seller, filed for Chapter 11 earlier this week.
In October, Rue21 elevated Chief Financial Officer Keith McDonough to the role of interim CEO, replacing Bob Fisch. At the time, the company said it was pursuing more e-commerce sales and customer-relationship management to help fuel growth.