(RNN) - Children's clothing chain Gymboree filed for Chapter 11 bankruptcy Sunday to slash debts and close hundreds of stores across the U.S.
Gymboree said it plans to remain in business but will move forward with plans to close 375 to 450 of its 1,281 stores. Gymboree employs more than 11,000 people, including 10,500 hourly workers.
The bankruptcy comes after Gymboree was unable to pay certain bills in recent months. The company is currently $1.4 billion in debt but expects store closures and other cost-cutting will alleviate $1 billion from that total.
Gymboree hopes to receive approval for their plans by Sept. 24.
"We expect to move through this process quickly and emerge as a stronger organization that is better positioned in today’s evolving retail landscape, with the right size store footprint and greater financial flexibility to invest in Gymboree’s long-term growth," Gymboree CEO Daniel Griesemer said.
James Mesterham, Gymboree's chief restructuring officer, said the retailer was hurt by lower-cost competition from Children's Place and Gap, which have less debt financing.
The company also announced its chief financial officer, Andrew North, would be resigning for personal reasons.
The company's Chapter 11 petition was filed in the U.S. Bankruptcy Court for the Eastern District of Virginia.
Gymboree is a children's clothing retailer based in San Francisco, with stores spread as far as Puerto Rico and Canada.
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