Charlotte Russe, a retailer aimed toward young women’s fashion, has filed for Chapter 11 bankruptcy protection, according to reports.
The retailer, which has more than 500 stores across the country, including 10 stores called Peek Kids, will close around 95 locations while it continues to search for a buyer.
Charlotte Russe was bought by private equity outfit Advent International in 2009 for $380 million, but due to dropping mall attendance and rising debt, the company has continued to struggle, along with other traditional mall retailers.
Last year, the company completed a restructuring deal to lower its debt from $214 million to $90 million. The retailer has gotten a commitment for up to $50 million of debtor-in-possession funding to help it run during the bankruptcy proceedings. All of the retailer’s online operations and stores are currently operational.
Another landmark mall retailer, Sears, is currently embroiled in its own debt and foot traffic problems, with stores closing all over the country. Now, a deal meant to save the struggling store is facing obstacles, as the U.S. government and major mall owners are trying to block the bid from Eddie Lampert, Sears’ chairman, investor and former CEO.
A few weeks ago, Lampert’s ESL Investments won a bankruptcy court auction for the retailer, prevailing over a bid from Abacus Advisors Group LLC that would have closed down the retailer’s locations, as well as sold its inventory. Lampert’s plan, however, is said to keep approximately 400 locations in operation. The bid for $5.2 billion has already secured financing, with $850 million coming from a new asset-based loan provided by Bank of America, Citigroup and Royal Bank of Canada.
However, USA Today reported that the Pension Benefit Guaranty Corporation (PBGC) is against the deal, alleging that it aims to inappropriately obtain ownership of the chain’s Kenmore and DieHard brands. In addition, some mall owners, including Simon Property Group, are accusing Lampert of creating a “scheme” to “steal” the company and benefit from its decline.