New RSC Holdco, Inc. (f/k/a New rue21 Holdco, Inc.), the Warrendale, Pennsylvania specialty fashion retailer behind the rue21 brand, filed chapter 11 petitions on May 2, 2024 in the U.S. Bankruptcy Court for the District of Delaware. The company said it operated 540+ stores across 45 states and employed about 4,900 workers at the petition date. The filing was the chain's third bankruptcy and coincided with an announcement that all stores would close and liquidate inventory.
Court filings describe a dual-track process: going-out-of-business sales for store inventory and a parallel sale of the brand and other intangibles. The First Day Declaration lists about $194.4 million of funded debt and roughly $27,000 in cash at filing. The court approved a sale of the brand and intellectual property to YM Inc. (Sales), a Toronto-based retailer that owns brands such as , for a price reported at about . The chapter 11 cases were later dismissed through a on July 17, 2024, followed by a entered September 16, 2024 that closed the dockets.
New RSC Holdco, Inc. (f/k/a New rue21 Holdco, Inc.) and affiliated entities
Court
U.S. Bankruptcy Court, District of Delaware
Case Number
24-10939 (jointly administered)
Judge
Hon. Brendan Linehan Shannon
Petition Date
May 2, 2024
Employees
About 4,900
Stores
540+ across 45 states
Headquarters
Warrendale, Pennsylvania
Distribution Center
Weirton, West Virginia
Brands
rue21, true, rue+
Total Funded Debt
About $194.4 million
ABL Facility
About $29.7 million (agent: Bank of America, N.A.)
Term Loan Facility
About $164.7 million (agent: Blue Torch Finance, LLC)
Trade Claims
About $65 million
Cash on Hand (Petition)
About $27,000
Cash Collateral
Interim order May 3, 2024; final order June 17, 2024
IP Buyer
YM Inc. (Sales)
Sale Order Date
May 31, 2024
Structured Dismissal Order
July 17, 2024
Final Dismissal Order
September 16, 2024
Case Snapshot
Restructuring overview
The debtors entered chapter 11 on May 2, 2024 with a plan to wind down store operations and run a parallel sale process for the brand and intellectual property. The First Day Declaration describes a dual-track strategy: (1) going-out-of-business sales for inventory and store-level assets and (2) a marketing process for assets not being liquidated in store closings, including intellectual property and other intangibles. That approach framed the case from the start, with cash collateral funding to keep operations running through liquidation and a focused timetable for a 363 sale.
The cases were jointly administered under the lead debtor docket.
Retail coverage characterized the filing as a liquidation-driven case rather than a traditional reorganization. Sourcing Journal reported that 540 stores would be shut and that the brand would be sold as part of the process, a description consistent with the dual-track strategy laid out in the court filings.
On the funding side, the debtors sought authorization to use cash collateral on the petition date and obtained an interim cash collateral order on May 3, 2024, followed by a final cash collateral order on June 17, 2024. The cash collateral budget and variance regime set the operational guardrails for the store-closing process and liquidation receipts.
Early case administration orders also put the claims process in place. The court entered an order appointing Kroll as claims and noticing agent, authorizing Kroll to receive and maintain proofs of claim, keep the official claims register, and provide public access to filed claims. That appointment was effective as of the petition date and provided the infrastructure for claims administration even as the case moved toward dismissal.
On the sale track, the court entered a bidding procedures order on May 23, 2024 and later approved the sale of the brand and intellectual property to YM Inc. (Sales) in a sale order entered May 31, 2024. The order authorized a transaction built around a $3.975 million deposit, a closing-date payment construct, and a minimum FF&E purchase amount of $975,000, with customary mechanisms for contract assumption and tax allocation.
The estate then moved to dismissal once the liquidation and sale process ran its course. The court entered a structured dismissal order on July 17, 2024 that preserved key orders and established wind-down and professional fee procedures. A later final dismissal order on September 16, 2024 made the dismissal effective, directed that the dockets be closed, dissolved the official committee, and relieved Kroll of claims and noticing duties after completion of wrap-up tasks.
Selected case milestones.
Date
Event
Source
May 2, 2024
Chapter 11 petitions and first day declaration filed
Voluntary petition; First Day Declaration
May 3, 2024
Interim cash collateral order entered
Interim cash collateral order
May 23, 2024
Bidding procedures order entered
Bidding procedures order
May 31, 2024
Sale order entered for YM Inc. (Sales)
Sale order
June 17, 2024
Final cash collateral order entered
Final cash collateral order
July 17, 2024
Structured dismissal order entered
Structured dismissal order
September 16, 2024
Final order dismissing the cases entered; dockets closed
Final dismissal order
Debtwire noted that the first day hearing was scheduled for May 3, 2024 in Wilmington, Delaware. While the case moved quickly into liquidation, that early hearing framed the cash collateral and store closing issues that dominated the docket.
Business overview and footprint
rue21 is a specialty fashion retailer selling apparel and accessories to teens and young adults. The debtors operated under the rue21, true (intimates), and rue+ (plus-size) brands, with headquarters in Warrendale, Pennsylvania and a distribution center in Weirton, West Virginia. The company sold through physical stores and an e-commerce site at rue21.com.
Local reporting noted operational changes around the filing. CBS Pittsburgh reported that the company website was no longer operational after the filing, underscoring that the wind-down was centered on in-store liquidation rather than a pivot to online sales.
The decline from the peak footprint to 540+ stores reflects a long period of contraction after earlier restructurings. In its 2017 chapter 11 filing, the company said it would close about 400 locations and refocus on higher-performing stores, a smaller footprint that still left hundreds of stores in operation ahead of the 2024 filing.
The company has used chapter 11 more than once as part of its footprint adjustments. It first sought bankruptcy protection in 2002, exited in 2003 under the rue21 name, and then returned to chapter 11 in 2017 with a plan to reduce debt and focus on its best-performing stores. That restructuring included plans to close roughly 400 stores, a contraction that preceded the larger liquidation process in 2024.
The company also emphasized customer engagement in its prepetition messaging. A 2020 refinancing announcement noted that the rue rewards loyalty program had reached 2.8 million members, and management described the refinancing as a way to support growth initiatives. That context shows that the company attempted to stabilize liquidity and invest in the business before the 2024 filing.
Drivers of distress and liquidity constraints
The First Day Declaration frames the 2024 filing around macro and retail-specific pressures. The debtors cited COVID-19 effects, the shift toward online shopping, increased competition, and inflationary pressure on their core customer. The same filing reported that the business had insufficient revenue to meet long-term liquidity needs and entered chapter 11 with about $27,000 in cash.
Store footprint and mall exposure also shaped the wind-down. A Community Impact analysis found that 309 locations were in malls, highlighting the chain's reliance on mall traffic even as the declaration pointed to consumer migration to online shopping.
The declaration also described defaults under the ABL and term loan facilities beginning in 2022, with repeated amendments and waivers. That history, combined with the constrained cash position at filing, left the debtors dependent on cash collateral from secured lenders to fund operations and the liquidation process.
The liquidity pressure followed earlier efforts to extend runway. A 2020 refinancing announcement said the company increased ABL availability to $155 million with a FILO partnership between Bank of America and Tiger Finance, reporting liquidity above $100 million at the time. The subsequent defaults described in the bankruptcy filings highlight how those amendments did not prevent the 2024 cash crunch.
External reporting indicated the company explored a sale before filing. Axios reported that rue21 tried to sell the business, but no bids exceeded the liquidation value, leading the debtors to pursue store-closing sales instead. The store closing process was described as a near-term wind-down, with liquidation sales expected to conclude in four to six weeks.
Capital structure at the petition date
The debtors reported about $194.4 million in funded debt at filing, split between a $29.7 million ABL facility and a $164.7 million term loan facility, with roughly $65 million of trade claims. The First Day Declaration identifies Bank of America, N.A. as ABL agent and Blue Torch Finance, LLC as term loan agent. Debtwire reported that Blue Torch held approximately 80% of the common stock in the parent company.
The debt structure reflected amendments and an upsizing of the term loan over time. The First Day Declaration describes defaults beginning in 2022, multiple waivers, and an expansion of the term loan to roughly $165 million, leaving the debtors highly leveraged relative to the shrinking store base.
The maturity profile shows that the debt stack was not immediately due in 2024, but the defaults and liquidity constraints described in the filings drove the need for chapter 11 relief even with later maturities.
The debtors did not seek a DIP facility. Instead, they moved to use cash collateral on the petition date and obtained an interim cash collateral order on May 3, 2024, followed by a final cash collateral order on June 17, 2024. The final order authorized cash collateral use under an approved budget with variance tests and provided adequate protection to the secured lender group.
The final cash collateral order set core financial controls: weekly receipts could not fall below 90% of budget and weekly disbursements could not exceed 105% of budgeted levels. The order granted replacement liens and superpriority claims as adequate protection, and it provided for cash-pay interest and fees at the contract default rate for the ABL lenders. The order also tied cash collateral consent to continuation of the store-closing consultant arrangement, aligning liquidity access with the going-out-of-business process.
Cash collateral terms (selected).
Key terms from the final cash collateral order:
Term
Detail
Funding structure
Cash collateral (no DIP facility)
Budget
Approved budget with permitted variances
Weekly receipts test
Not below 90% of budget
Weekly disbursements test
Not above 105% of budget
Adequate protection
Replacement liens and superpriority claims
Beyond the numeric tests, the final cash collateral order required periodic reporting and compliance certifications tied to the approved budget. Those reporting obligations were typical for retail liquidations funded by secured lenders, but they also reflected how tightly the cases were managed once liquidation and IP sale became the primary objectives.
The store closing program was run by Gordon Brothers Retail Partners, which Debtwire identified as the store closing consultant. Axios reported that liquidation sales were expected to run four to six weeks, aligning with the short runway for cash collateral use and a rapid wind-down.
The debtors pursued a sale of the brand and related intangibles under section 363 of the Bankruptcy Code. The court entered a bidding procedures order on May 23, 2024 and approved the sale to YM Inc. (Sales) in the May 31, 2024 sale order. The order describes a purchase agreement structure that included a $3.975 million deposit, a closing-date payment mechanism, and a minimum FF&E purchase amount of $975,000, alongside customary assumed liability and contract assignment provisions.
Sale terms (selected).
Key terms from the sale order:
Term
Detail
Purchaser
YM Inc. (Sales)
Deposit
$3,975,000
Minimum FF&E purchase amount
$975,000
Sale process
Court-approved 363 sale
The sale order excerpts describe several mechanics that shaped the economics and closing process. The buyer's deposit was held in escrow under an account agreement, with a closing-date payment construct and an FF&E purchase amount calculated using a per-store formula, subject to the $975,000 minimum. The order also describes a tax allocation process under Internal Revenue Code section 1060 and the execution of IP assignments. Contract assumption provisions required cure payments for any assumed contracts and provided a mechanism for assignment of designated agreements. These provisions were set out in the sale order, which approved the transaction structure rather than a single consolidated purchase price figure in the order text.
External coverage reported a total purchase price of roughly $4 million for the brand and IP. YM is a Toronto-based fashion retailer with a portfolio that includes Charlotte Russe, Urban Planet, Bluenotes, and Suzy, among other brands. CoStar reported that YM began reopening stores after the acquisition and was planning a broader reopening effort, while Patch reported that dozens of stores reopened or were scheduled to reopen under the new ownership.
Patch also noted that specific Pennsylvania locations, including Monroeville Mall and the Mall at Robinson, were among the sites reopening or planned to reopen. Those examples illustrate that the post-bankruptcy strategy emphasized selective reopening rather than restoring the full 540-store footprint.
After the store liquidation and IP sale process, the debtors moved to dismiss the cases rather than confirm a plan. The court entered a structured dismissal order on July 17, 2024. That order preserved key rulings such as the cash collateral and sale orders, established wind-down reserve and professional fee procedures, and dissolved the official committee. It also set the framework for completing remaining administrative steps before final dismissal.
The structured dismissal order provides a practical map for how a liquidation-focused case can end without plan confirmation. It preserved the sale order and final cash collateral order for res judicata purposes, set procedures for final professional fees, and created a wind-down reserve to cover remaining administrative costs. The order also retained jurisdiction over disputes arising from implementation of the dismissal and related orders. Those mechanics are laid out in the structured dismissal order, which functioned as the case's primary exit document.
The court later entered a final dismissal order on September 16, 2024. The order made the dismissal effective on entry, directed that the dockets be marked closed, and authorized the debtors to dissolve their corporate entities. The final order also relieved Kroll of claims and noticing duties after it completed final register uploads and other wrap-up tasks.
Dismissal framework (selected).
Element
Treatment
Source
Structured dismissal order
Preserved key orders and set wind-down procedures
Structured dismissal order
Committee status
Dissolved as of dismissal
Structured dismissal order
Case closing
Dockets marked closed on final order
Final dismissal order
Claims agent wrap-up
Kroll relieved after final register tasks
Final dismissal order
Claims administration remained important even in a short-lived case. The claims agent order appointed Kroll to maintain the official claims register, receive proofs of claim, and provide public access to filed claims. Those duties carried through the dismissal process, with the final order directing Kroll to complete a combined final claims register and related uploads before it was relieved of duties.
Frequently Asked Questions
What is rue21 and where is it based?
rue21 is a specialty fashion retailer focused on teen and young adult apparel under the rue21, true, and rue+ brands. The company is based in Warrendale, Pennsylvania, with a distribution center in Weirton, West Virginia, and has operated a national store footprint since its founding as Pennsylvania Fashions Inc.. The business traces its roots to 1970 and later rebranded as rue21 after its 2003 exit from its first bankruptcy, eventually growing to about 1,000 stores by 2013.
When did rue21 file chapter 11 and how many stores did it operate?
The debtors filed chapter 11 petitions on May 2, 2024. At filing, the company reported 540+ stores across 45 states, and it announced that all stores would close and liquidate inventory in the weeks that followed the filing. For context, CNN reported that the chain had 1,200 locations at its peak, underscoring how the 2024 footprint reflected a long contraction.
Why did rue21 file for bankruptcy in 2024?
The First Day Declaration cites COVID-19 effects, the shift to online shopping, competitive pressure, and inflation on the core customer as key headwinds. The debtors also reported insufficient revenue to meet long-term liquidity needs and entered the case with about $27,000 in cash.
How much debt did rue21 have at filing?
The company reported about $194.4 million in funded debt, including a ~$29.7 million ABL facility and a ~$164.7 million term loan, plus about $65 million in trade claims.
What happened to the stores and employees?
The company announced that all 540+ stores would close and that liquidation sales would run over a short period, reported as four to six weeks. Coverage of the filing estimated that about 4,900 workers were affected, and local reporting detailed closures across Pennsylvania markets, including more than 20 locations statewide and all five Western Pennsylvania stores.
Who bought the brand and what did the sale include?
The court approved a sale of the brand and intellectual property to YM Inc. (Sales) in a sale order. The order describes a deal structure that included a $3.975 million deposit and a minimum $975,000 FF&E purchase amount, alongside assignment mechanisms for specified contracts. External reporting put the purchase price at roughly $4 million.
The court entered a structured dismissal order on July 17, 2024 that preserved key orders, established a wind-down reserve, and set procedures for final professional fees. A final dismissal order on September 16, 2024 made the dismissal effective, directed that the case dockets be closed, and authorized the debtors to dissolve their entities after entry.
How long did the 2024 chapter 11 case last?
The petitions were filed on May 2, 2024. The court entered a structured dismissal order on July 17, 2024, and later issued a final dismissal order on September 16, 2024 to close the dockets. Those dates show a rapid liquidation case that moved from filing to dismissal in roughly two and a half months, with final administrative closure in September.
Who is the claims agent for rue21?
Kroll Restructuring Administration LLC serves as the claims and noticing agent. The firm maintains the official claims register and administers proofs of claim and noticing in the case.
45 states https://www.cnn.com/2024/05/03/business/rue21-bankruptcy-stores-closing/index.html
Charlotte Russe and Urban Planet https://www.costar.com/article/864369536/new-rue21-owner-gives-shuttered-chain-another-lease-on-life
$4 million https://www.law360.com/bankruptcy-authority/articles/1838556/rue21-lands-4m-bid-for-ip-from-canadian-fashion-co
540 stores would be shut https://sourcingjournal.com/topics/retail/rue21-retail-doors-competition-losses-third-chapter-11-filing-teen-tween-509130/
May 3, 2024 https://ionanalytics.com/insights/debtwire/case-profile-fashion-retailer-rue21-inc-files-third-bankruptcy-aiming-to-sell-assets-wind-down-operations/
Company history https://en.wikipedia.org/wiki/Rue21
close about 400 locations https://www.prnewswire.com/news-releases/rue21-to-reduce-debt-and-focus-on-best-peforming-stores-through-chapter-11-reorganization-with-creditor-support-and-new-capital-300458132.html
51 stores in Texas https://communityimpact.com/austin/south-central-austin/business/2024/05/08/rue21-will-close-all-543-stores-amid-bankruptcy-filing-including-50-in-texas/
all five Western Pennsylvania stores https://triblive.com/local/regional/all-five-rue21-stores-in-western-pennsylvania-to-close-their-doors-after-latest-bankruptcy-filing/
dozens of stores reopened or were scheduled to reopen https://patch.com/pennsylvania/pittsburgh/bankrupt-mall-staple-rue21-climbs-out-retail-grave
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.