Women's clothing retailer Cache has filed for Chapter 11 bankruptcy protection after running out of time and money to complete a turnaround.
The New York company said Wednesday that it will keep running its business, but it also will continue to close stores and sell or renegotiate some of its leases. Cache sells dresses, sportswear and accessories and runs 218 stores, or 20 fewer than it operated in December.
The retailer has secured up to $22 million in financing from Salus Capital Partners to keep operating during the bankruptcy proceeding. That financing is subject to court approval.
Cache said it also plans to seek a so-called stalking horse buyer for its assets. That involves a potential buyer making an initial offer to set the floor for an auction that invites competitive bids.
"We believe that this action provides (Cache) the greatest opportunity to secure a strategic partner while maximizing recovery to our stakeholders," Chairman and CEO Jay Margolis said in a statement from the company.
Cache said in December that its board had decided to explore strategic alternatives that include a possible merger or sale. It also said it had received an inquiry about a potential sale, but no formal offers had been made.
The company had been focused on upgrading stores and closing unprofitable locations, among other business improvements. In November, Cache reported an $11.5 million quarterly operating loss that included nearly $300,00 in employee severance charges.
The company said Wednesday that revenue from its established stores rose nearly 10 percent during the ensuing holiday season, but its push to improve the business has been thwarted by online shopping growth, rapidly changing consumer tastes and "the depressed brick and mortar retail market."
A Chapter 11 filing gives a company protection from creditor lawsuits while it reorganizes its finances.
Cache joins a list of retailers that have sought Chapter 11 protection over the past couple months that includes The Wet Seal Inc., Delia's Inc. and Deb Stores. Those businesses focus on teen clothing, a market hurt by tough competition and changing tastes.
In addition, another troubled retailer, RadioShack Corp., warned last year that it may have to seek Chapter 11 bankruptcy, and its CEO has said that it may not be able to find a long-term plan to stay afloat. The New York Stock Exchange plans to delist the company's shares.
Cache said Wednesday that its shares will be removed from the Nasdaq exchange, a move the company does not plan to appeal.
The stock traded for nearly 3 cents Wednesday morning. The price slipped below a dollar last summer and has declined since then.