NEW YORK — Pennsylvania Fashions Inc. has emerged from bankruptcy proceedings with a new name, Rue 21 Inc.
As reported, Rue’s parent, Pennsylvania Fashions Inc., filed for Chapter 11 in February 2002. The company elected to begin the new chapter of its retail history under its better-known nameplate.
Attorney Rob Feinstein of Pachulski, Stang, who represented the unsecured creditors committee, said it was still unclear how much unsecured creditors would be able to recover. As part of the company’s plan of reorganization, it contributed $1.5 million in cash and notes to a litigation trust in connection with claims against former shareholders of Pennsylvania.
According to bankruptcy court documents, there is also the possibility that a “fraudulent conveyance” lawsuit might be filed against the former shareholders in connection with the recapitalization of the company several years before it filed for bankruptcy.
The recapitalization, Feinstein said, resulted in private equity firm Saunders Karp & Megrue becoming the majority shareholder. The equity firm is still Rue 21’s largest shareholder.
According to Feinstein, Rue 21, based in Warrendale, Pa, operates 169 stores in 37 states and caters to customers between the ages of 15 and 30.