United Retail seeks a new buyer under bankruptcy protection
February 1, 2012 12:23 PM
It’s been a busy morning at United Retail Group, which is filing for Chapter 11 bankruptcy and looking to sell its assets to a private equity firm or another buyer.
Until recently United Retail Group, which operates plus-size women’s apparel retailer Avenue.com, was owned and operated by Redcats USA, No 33 in the Internet Retailer Top 500.
But in a new bankruptcy petition filed by United Retail with the U.S. Bankruptcy Court for the Southern District of New York, the company says it is being sold by Redcats in order to reorganize and sell its assets to Versa Capital Management, a private equity firm, or another buyer. “We are happy to have found a buyer and are confident in Versa’s plan to continue re-energizing the Avenue brand,” says Redcats USA executive vice president John Heaney. “This sale was part of a strategic decision by Redcats USA to focus its business online moving forward, and we are pleased to have found a company that can continue the turn-around process we envisioned from the beginning.”
If successful in its stalking horse bid, Versa says it will continue to operate Avenue.com and the chain’s more than 400 stores. A stalking horse bid is an initial bid on a bankrupt company’s assets from an interested buyer chosen by the bankrupt company that sets the floor for minimum acceptable bids.
While it goes through a bankruptcy reorganization, United Retail says it has secured a $40 million line of credit under debtor-in-possession financing to continue operations. “With today’s filing, we are seeking relief from disproportionately high costs for many of our leases that were signed prior to the recession,” says CEO Dawn Robertson. “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.”
Redcats acquired United Retail in 2007.