Rue21 Could Be Next Retail Bankruptcy

(RTTNews) - Rue21 Inc. could soon be joining the growing list of apparel retailers filing for bankruptcy as the company struggles with a huge debt and sluggish mall traffic.

The Warrendale, Pennsylvania-based teen fashion retailer is owned by private equity firm Apax Partners LP. The company operates more than 1,100 stores in shopping malls and outlets, offering its own brands such as ruebeaute!, rue21 etc!, Carbon Elements, rue+ and rueGuy.

Rue21 has a debt load of about $1 billion, primarily stemming from its leveraged buyout by Apax Partners in 2013.

According to Reuters, Rue21 has hired real estate advisers to help it negotiate with landlords, while it has also engaged an operational restructuring adviser for assistance in preparing for bankruptcy.

The retailer has reportedly reached forbearance agreements with lenders that extends through late April. The forbearance agreement is said to have came after the company was unable to make a payment on a term loan.

Rue21 joins several other retailers who have recently filed for bankruptcy protection, such as Nasty Girl, Gordman Stores, American Apparel, Aeropostale, and Wet Seal.

Several apparel retailers have been struggling lately as traffic continues drop with teens preferring fast-fashion apparel retailer such as H&M and Forever 21 or online shopping.

Earlier this week, specialty family footwear retailer Payless Shoesource said it filed for Chapter 11 bankruptcy.