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United Retail Group seeks bankruptcy protection

By AP  | February 01, 2012
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ROCHELLE PARK, N.J. (AP) — United Retail Group, which runs the women's clothing chain Avenue, has filed for Chapter 11 bankruptcy protection and plans to sell its business to a private equity firm.

United Retail, based in Rochelle Park, N.J., said Wednesday that it made the move as it struggled with what it called "disproportionately" high cost of leases it signed before the recession.

The company has 433 Avenue stores. It is a subsidiary of privately held home-shopping women's clothing seller Redcats USA. Once it sheds Avenue, Redcats plans to shift its focus toward online sales.

Versa Capital Management has agreed to submit an initial bid, known as a "stalking horse" bid, in a court-supervised auction of the business. The private equity firm, which has worked with other retailers, has agreed to buy the company's assets for an undisclosed cash price.

Versa Capital plans to operate Avenue and keep the majority of Avenue stores open.

The proposal would enable a sale of the business to Versa Capital or to another potential bidder approved by the court. The company anticipates the sale would be completed quickly.

United Retail has arranged for $40 million debtor-in-possession financing to allow it to continue to operate the business during the restructuring.

"The turnaround of Avenue can continue, enabling the business to emerge stronger, with fewer liabilities, and with better store profitability," Dawn Robertson, CEO of United Retail Group, said in a statement.

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