rue21 Chapter 11 plan confirmed, expected to take effect by Friday

By Caroline Salls

Pittsburgh, Sept. 11 – rue21, Inc. announced Monday that the U.S. Bankruptcy Court for the Western District of Pennsylvania confirmed its plan of reorganization, clearing the way for the company to emerge from the bankruptcy process.

The company said it expects the plan to take effect by Sept. 15.

“Today’s confirmation represents an important step forward in rue21’s ongoing business transformation to a sustainable business model for a highly performing retailer,” chief executive officer Melanie Cox said in a company news release.

“With the support of our lenders, our landlords, all of our business partners and the hard work of our team, the company has performed consistently well ahead of its liquidity plan and exceeded its second-quarter target for adjusted EBITDA by over 200%.

“rue21 can now move forward from a position of renewed strength, with a highly relevant brand, an enthusiastic and loyal customer base, hundreds of highly performing stores and a rapidly growing eCommerce business supported by strong vendor relationships and terms that are trending well above plan.”

As previously reported, rue21 filed bankruptcy after reaching agreement on a restructuring with holders of 96.8% of its secured term loan and 60.2% of its notes. The restructuring support agreement was also signed by the company’s majority shareholder.

Under the proposed restructuring, a $50 million new money debtor-in-possession facility will be converted into a $50 million exit facility.

A $100 million roll-up DIP term loan facility will be exchanged for 77% of the equity of the reorganized company.

Holders of pre-bankruptcy term loan claims will receive 19% of the equity of the reorganized company.

Unsecured creditors who accepted the plan will be allocated 4% of the equity.

rue21 is a Warrendale, Pa., teen-focused specialty retailer that filed for bankruptcy on May 15 under Chapter 11 case number 17-22045.

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