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Case Details

Case Code: BSTR602
Case Length: 9 Pages
Period: 2017-19
Pub Date: 2020
Teaching Note: Available
Price: Rs.250
Organization : Charlotte Russe Holding Inc.
Industry :Textiles & Apparel
Countries : United States
Themes: Bankruptcy & Turnaround Management/Macroeconomic Environment
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Charlotte Russe Bankruptcy: A Revival Plan

 

ABSTRACT

 
The case is about US-based clothing retail chain store Charlotte Russe Holdings Corp. that filed for Chapter 11 bankruptcy protection in February 2019 in a bid to get relief from mounting debt. The fashion retailer had been struggling to cope for some time after it had incurred heavy losses in its business and had announced a deal to renegotiate certain debts. However, this deal failed to deliver. It then tried to find a buyer for the company. In February 2019, it filed for Chapter 11 bankruptcy, planning to close down about 94 of its 512 stores. Soon after the filing, the company entered into talks with prospective buyers to avoid liquidation of all of its assets. Nearly a month after Charlotte Russe filed for bankruptcy, it announced that it would go out of business and close down all its stores as it had failed to find a buyer. Meanwhile, the company remained in negotiations to sell off its intellectual property. While the liquidation firm SB360 Capital Partners bought the mall chain’s assets, its intellectual property remained intact, indicating that the store’s brand could come back in some form in the future. Later, Charlotte Russe sold its brand and related intellectual property to Canadian fashion house YM Inc. YM Inc. announced plans to re-launch the brand by opening 100 retail locations across the country. It also had plans to launch a new online shopping experience. It remained to be seen whether the new management would manage to revive the company.
 
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Issues

The case is structured to achieve the following teaching objectives:
  • Understand the changing landscape of mall-based retailing in the US.
  • Evaluate how out-of-court restructuring can help a debt-ridden firm.
  • Understand the requirement for filing for bankruptcy.
  • Assess the need for liquidation of the firm after bankruptcy filing
Contents
INTRODUCTION
ABOUT THE COMPANY
CAN IT MAKE A COMEBACK?
EXHIBITS

Keywords

Mall-based fast-fashion retailer; Debt restructure; Out-of-court restructuring; Market strategy; Online business; Credit rating; In-store foot traffic; Digital competition; Chapter 11 bankruptcy protection; Restructuring plan; Going out of business

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