Teen Clothing Chain DEB Files for Bankruptcy Protection

NEW YORK (AP) - Teen retailer Deb Shops Inc. says several of its lenders have made a joint opening bid for the company as it enters Chapter 11 bankruptcy court protection and begins a financial restructuring.

The company said Sunday that it needed to restructure after a slowdown during the recession. Its stores will continue normal operation during the process, the company said.

Deb Shops, which sells junior and plus-size clothing online and in more than 324 stores nationwide, was a public company for nearly 25 years before Lee Equity Partners took it private in 2007. It began in the 1930s as a hosiery store in Philadelphia.

Still based in Philadelphia, the company said it filed its bankruptcy petition with the U.S. Bankruptcy Court for the District of Delaware and will be bought out by lenders led by Ableco Finance LLC in a deal expected to close in September.

Lee Equity Partners will receive a partial stake in the company due to its interest in Deb Shops' senior credit facility.

Deb Shops joins many other retailers felled by the recession as consumers cut their spending, including Circuit City Stores Inc. and Linens `N Things.

"The dramatic unexpected change in the economy beginning in 2008 made a financial restructuring of this kind critical," the company said.

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