Owners of plus-size clothing chain Avenue, United Retail Group Inc. has filed for Chapter 11 bankruptcy protection and has announced plans to sell the company, according to Bloomberg.
United Chief Executive Officer Dawn Robertson said in a statement, “We are seeking relief from the disproportionately high costs of our leases that were signed prior to the recession.”
In its bankruptcy filing United Retail listed assets of $117.2 million with debts of $62 million. It will ask for permission to take out a $40 million loan from Wells Fargo to continue operations while the reorganization takes place.
A Philadelphia based private equity firm affiliated with Versa Capital Management is serving as the lead bidder in a court supervised auction.
Avenue operates 433 stores nationwide. The company has asked the court for permission to continue paying vendors and employees. United plans to keep every store open during bankruptcy.
Chapter 11 bankruptcy
protection allows a company to continue normal operation while they reorganize debts. Bankruptcy attorneys suggest this filing so that a company can continue operations and return to profitability.
Bankruptcy is not something a company wants to face, but when they consult with a bankruptcy lawyer
they may see how it can be helpful in the long run. A business may be saved under bankruptcy protection.
A bankruptcy attorney
will determine which filing is best for the troubled business, whether it is reorganization or liquidation.