Rue21 Inc., a teen clothing chain backed by private equity firm Apax Partners, is preparing to file for bankruptcy, according to people familiar with the matter.
A filing could come as soon as this month, said the people, who asked not to be identified because the process isn't public. As it negotiates with lenders, the company has a forbearance agreement in place that lasts through late April.
Like many retailers, the Warrendale, Pennsylvania-based chain has seen a falloff in mall traffic. Apax bought the company, which operates more than 1,000 stores, for about $1 billion in 2013. It sells young men's and women's clothing, makeup and accessories, including the Ruebleu swimwear line.
"Rue21 has been working to improve its operations and enhance its liquidity position and has been actively engaged with its lenders and bondholders to explore the best path forward," the retailer said in a statement.
The filing would continue a tumultuous year for U.S. retail, with numerous chains seeking bankruptcy protection and others closing huge swaths of stores. Payless Inc., the discount shoe seller, filed for Chapter 11 earlier this week.
In October, Rue21 elevated Chief Financial Officer Keith McDonough to the role of interim chief executive officer, replacing Bob Fisch. At the time, the company said it was pursuing more e-commerce sales and customer-relationship management to help fuel growth.