By Jeannie O'Sullivan

Law360 (July 13, 2020, 10:52 AM EDT ) The corporate parent of New York & Co. and other apparel brands hit Chapter 11 in New Jersey Bankruptcy Court on Monday with plans to close a significant portion of its stores as it struggles with nearly $450 million in debt, marking the latest retail dress-down compounded by the COVID-19 pandemic.

RTW Retailwinds Inc. plans to ask the court for approval to use its cash collateral to continue paying employees, suppliers and vendors as it contemplates the sale of its e-commerce business and intellectual property, the company said in a statement.

The filing comes after months of layoffs and the realization that the "retail apocalypse" has rendered its brick-and-mortar business unsalvageable, according to a declaration filed in support of various first-day motions.

"The combined effects of a challenging retail environment coupled with the impact of the coronavirus (COVID-19) pandemic have caused significant financial distress on our business, and we expect it to continue to do so in the future," Sheamus Toal, RTW's chief executive officer and chief financial officer, said in a statement.

"As a result, we believe that a restructuring of our liabilities and a potential sale of the business or portions of the business is the best path forward to unlock value. I would like to thank all of our associates, customers, and business partners for their dedication and continued support through these unprecedented times," Toal continued.

RTW plans to close a "significant portion, if not all" of its stores and has launched a store closing and liquidation process, according to the statement. About 92% of its stores have reopened amid lifted coronavirus restrictions, the statement said. Toal added that RTW plans to pay back the $12.7 million outstanding balance on a loan from Wells Fargo Bank.

A hearing on first-day motions is scheduled for 11 a.m. Wednesday.

The coronavirus pandemic was the "nail in the coffin" for RTW following years of declining interest in in-person shopping, Berkeley Research Group LLC Director Robert Shapiro said in a declaration filed Monday. Berkeley is serving as RTW's financial adviser.

RTW in March furloughed nearly all of its store employees and a significant portion of its home office associations for a 78% reduction in weekly payroll, according to Shapiro's declaration, and permanently laid off 190 corporate office associations and 13 district managers in May.

Despite the cost-cutting efforts, the company suffered and will continue to suffer as a result of the coronavirus-related store closures, the declaration said.

In consultation with investment banker B. Riley FBR Inc., the company determined that a sale of its brick-and-mortar business isn't viable or likely in the current circumstances, but that its e-commerce business might attract buyers, the declaration said. Accordingly, the stores are in the midst of going-out-of-business sales expected to last three months, the declaration said.

"The debtors believe and respectfully submit that this dual track process — that is, an orderly liquidation of their store inventory through GOB sales and a going concern sale of the eCommerce business — maximizes the value of the debtors' assets and the recovery to creditors," the declaration said.

Incorporated in 1918, RTW operates about 378 retail and outlet locations in 32 states along with an e-commerce business, including clothing rentals.

In addition to New York & Co., the company's brands include Lerner New York Inc., Fashion To Figure LLC and Happy x Nature. The company is known for its collaborations with actresses Kate Hudson, Eva Mendes and Gabrielle Union.

RTW is represented by Michael D. Sirota, Stuart Komrower and Ryan T. Jareck of Cole Schotz PC.

The case is In re: RTW Retailwinds Inc., case number 20-18445, in New Jersey Bankruptcy Court.

--Editing by Marygrace Murphy.

Update: This story has been updated with additional information.

For a reprint of this article, please contact reprints@law360.com.