Avenue Files Chapter 11: What Does Bankruptcy Mean For The Plus-Sized Clothing Retailer?

Following the announcement that it would be closing all 222 of its stores, plus-sized clothing retailer Avenue Stores has filed for Chapter 11 bankruptcy protection.

Avenue said the decision to file for Chapter 11 comes as it looks to turn into an “e-commerce-only platform.” The retailer is looking to sell off its e-commerce business as it shutters the doors on its brick-and-mortar stores by the end of September.

The company has already begun liquidation sales at all of its stores.

The e-commerce business at Avenue includes its Avenue.com, Cloudwalkers.com, and Loralette.com sites. Avenue said these sites will continue to operate as it looks to find a buyer.

Through its Chapter 11 filing, Avenue has secured debtor-in-possession financing of up to $11 million from a lender that it petitioned prior to its bankruptcy filing. The company is also looking for the court to allow it to maintain certain customer programs and promotional offers through the restructuring and until if find a buyer for the e-commerce sites.

"As consumers have shifted away from physical stores to online retail channels in recent years, Avenue, like many other retailers, has been burdened with declining store traffic, unfavorable real estate obligations, increasing labor costs and growth in both general and specialty competitors, all of which culminated in a significant decrease in physical store productivity after many years of previously solid financial performance,” David Rhoads, president and chief financial officer at Avenue said.

“At the same time, Avenue.com accounts for roughly one-third of Avenue’s business with a strong and growing revenue base that has continued to enjoy solid margins and profitability, making it clear that a shift to an e-commerce-only business model is the most viable way to continue serving Avenue’s loyal customers, whose needs for fit, fashion and value we hope to continue serving for years to come,” Rhoads added.

Avenue has hired Configure Partners as its investment banker, which will solicit buyers and bids for the sale of the company’s e-commerce business as well as its assets and operations. Young Conaway Stargatt & Taylor, LLP is serving as Avenue’s legal counsel while Berkeley Research Group, LLC is the company’s restructuring advisor.

Avenue’s bankruptcy hearing will be held on Tuesday in the United States Bankruptcy Court for the District of Delaware.