Plus-sized clothing retailer United Retail Group voluntarily filed for Chapter 11 bankruptcy approval as it looks to sell itself to the private-equity firm Versa Capital Management.
United Retail, a unit of Redcats USA, owns 433 Avenue women's apparel stores and said it is seeking relief from disproportionately high costs for many of its leases that were signed prior to the recession.
"Through Chapter 11 relief and a lease renegotiation process, the turnaround of Avenue can continue, enabling the business to emerge stronger, with fewer liabilities, and with better store profitability," said Chief Executive Dawn Robertson.
The company signed an asset purchase agreement with an entity controlled by Versa Capital, which it plans to submit to the bankruptcy court as the stalking horse bid for a court-supervised auction of the business.
Versa Capital has agreed to buy the company's assets through the bankruptcy process for cash and the assumption of certain liabilities. The firm has also agreed to operate Avenue as a going concern while keeping most of its stores open.
United Retail arranged for a $40 million debtor-in-possession credit facility from its existing revolving credit lender, Wells Fargo & Co.(>> Wells Fargo & Company), to provide sufficient working capital for Avenue to continue its operations as usual.
Redcats USA, a division of PPR SA (>> PPR), said selling United Retail will allow it to focus its business online. The company sells men's and women's plus-size apparel, home products and sporting goods through websites that include Woman Within, KingSize, BrylaneHome and Sportsman's Guide.
-By Melodie Warner, Dow Jones Newswires; 212-416-2283; [email protected]