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David's Bridal announced early Monday morning it filed for Chapter 11 protection in U.S. Bankruptcy Court in New Jersey, under which it will continue a sale process for the company.

Why it matters: Distressed situations and bankruptcies in the retail sector are increasing after a relatively quiet 2021 and 2022.

Details: David's Bridal will file a recognition proceeding in Canada, a notice that the retailer's operations there will undergo a restructuring tied to the U.S. bankruptcy filing.

It also expects its U.K. subsidiary to commence an administration proceeding, it said.

Context: The company said it considered a range of strategic alternatives to maximize value for its shareholders, including a sale process for its assets.

But liquidity constraints prevented the retailer from finalizing that process out of court, it said.

The retailer will manage inventory and evaluate its physical store footprint to get the most value and increase its chances to complete a going concern transaction.

Catch up fast: It's the second trip through bankruptcy court in less than five years for the Conshohocken, Pa.-based bridal company, colloquially known as a Chapter 22.

After the company revealed plans on Friday to lay off more than 9,000 employees in the coming months, Axios reported the company was preparing to file for bankruptcy.

The New York Times previously reported David's Bridal was weighing bankruptcy, advised by investment bank Houlihan Lokey, law firm Kirkland & Ellis and restructuring specialist Berkeley Research Group.

What they're saying: "Our business continues to be challenged by the post-Covid environment and uncertain economic conditions, leading us to take this step to identify a buyer who can continue to operate our business going forward," said CEO James Marcum in a statement.

The big picture: Retailers are getting hit from all sides in today's environment, particularly middle-market companies.

Costs across the board have increased, including materials, supply chain, labor, real estate, and most significantly, interest rates.

Middle-market firms are the most vulnerable because they depend more on short-term lending, which typically charges a floating interest rate.

Bankruptcies so far this year include Party City, Serta Simmons, Tuesday Morning, Shoe City and Forma Brands.

Flashback: CPPIB Credit Investments, a subsidiary of the Canada Pension Plan Investment Board, provided David's Bridal with a $70 million term loan to fund operations in 2021. That loan matures in 2024.

Of note: Private equity firm Oaktree Capital Management, which recently sold Boardriders to Authentic Brands Group, is a leading shareholder in David's Bridal.

David's Bridal continues sale process under bankruptcy protection

It hopes to find a buyer that can continue to operate the business.

A David's Bridal store stands in Manhattan.

Bankruptcy

David&#x27;s Bridal announced early Monday morning it<a class="gtmContentClick" data-vars-link-text=" filed for Chapter 11 protection " data-vars-click-url="https://www.axios.com/pro/retail-deals/2023/04/14/davids-bridal-preparing-to-file-for-bankruptcy" data-vars-content-id="3eb19f50-3fc8-4355-969e-174f473f523c" data-vars-headline="David&#x27;s Bridal continues sale process under bankruptcy protection" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/pro/retail-deals/2023/04/14/davids-bridal-preparing-to-file-for-bankruptcy" target="_self"> filed for Chapter 11 protection </a>in U.S. Bankruptcy Court in New Jersey, under which it will continue a sale process for the company.Why it matters: Distressed situations and bankruptcies in the retail sector <a class="gtmContentClick" data-vars-link-text="are increasing" data-vars-click-url="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-corporate-bankruptcy-filings-hit-12-year-high-in-first-2-months-of-2023-74567693" data-vars-content-id="3eb19f50-3fc8-4355-969e-174f473f523c" data-vars-headline="David&#x27;s Bridal continues sale process under bankruptcy protection" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-corporate-bankruptcy-filings-hit-12-year-high-in-first-2-months-of-2023-74567693" target="_blank">are increasing</a> after a relatively quiet 2021 and 2022.

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David's Bridal continues sale process under bankruptcy protection

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