Teen apparel retailer Papaya Clothing has joined the growing ranks of niche apparel sellers filing for bankruptcy. Facing liquidity problems and looking to shrink its store footprint, the retailer’s parent, Cornerstone Apparel, Inc., sought Chapter 11 bankruptcy protection in the federal court system’s Central California District last week, according to a court filing.
Papaya had expanded rapidly in recent years, opening 50 of the 80 stores it currently operates over the past six years, according to a Thursday court filing from company President and Chief Financial Officer Tae Yi. “The expansion effort took a heavy financial toll on the business operations of the debtor” as Papaya racked up construction and operating costs, Yi said. Those costs, combined with flagging retail sales, proved an unmanageable challenge for the company without bankruptcy protection. . . . more