Women’s apparel retailer Cache has announced it will be seeking bankruptcy protection through the Chapter 11 bankruptcy timeline — becoming the fifth U.S. retailer in a three-month span to seek help with filing bankruptcy.
According to a February 4 Reuters article, Cache has faced several challenges in recent years, including dropping mall traffic, growing competition from more affordably-priced retailers, online shopping’s continued expansion and reduced teen spending on clothing.
With the help of its Chapter 11 bankruptcy attorney, the New York-based Cache will be seeking to auction off its assets and will be getting debtor-in-possession financing of about $22 million Salus Capital Partners LLC. This financing will be subject to the bankruptcy court’s approval.
In the typical Chapter 11 bankruptcy timeline, the debtor, usually a multi-person organization or business, creates a court-approved debt restructuring plan that allows for a more manageable repayment of its debts. This form of bankruptcy protects the debtor from creditor lawsuits, as well. Cache is considering a full sell of its assets and folding operations following the Chapter 11 bankruptcy timeline.
Reuters reports that Cache, which has 218 mall-based locations, hasn’t reported profits in nine consecutive quarters. In November alone, Cache reported an $11.5 million operating loss per quarter. In 2013, Cache had approximately 2,652 employees.
Cache follows retailers like Delia’s, Body Central Corp, Deb Shops and Wet Seal in filing bankruptcy so far in 2015. A growing number of mall retailers are struggling as teens increasingly spend their money on electronics and online shopping, and avoiding the mall for more affordable fast-fashion retailers like Forever 21, HandM and Zara, among others. The 40-year-old Cache was the first company to bring high-fashion brands like Versace and Armani to the U.S, according to Reuters.
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