Debts become too large for plus-size clothing retailer

US junior and plus-sized clothing retailer Debs Shops filed for chapter 11 bankruptcy in Delaware yesterday with approximately $230 million in debt outstanding. The $230 million figure includes $142 million in first lien debt, $58.5 million in second lien debt, and $28.9 million in mezzanine debt, according to papers filed with the bankruptcy courts.

The petition to enter chapter 11 bankrupcty is part of a financial restructuring that will see a group of senior lenders taking ownership of the firm. The group has agreed to enter into a so-called 'stalking horse' arrangement which will see them pay $77 million in cash and take over Deb Shops' liabilities. Deb Shops' current owner, Lee Equity Partners, will also remain a stakeholder in the company, as a result of its interest in a senior credit facility, according to Deb Shops.