US teen apparel retailer Delia's has filed for Chapter 11 bankruptcy protection, two months after revealing it was exploring strategic alternatives, including a possible sale or merger.

The company said it filed the petition with the United States Bankruptcy Court for the Southern District of New York. It will continue to manage its properties and operate its businesses as "debtors-in-possession" under the jurisdiction of the court, it said.

Delia's said that after exploring strategic alternatives to raise financing and/or engage in a sale or merger, the board concluded it was in the best interests of the company's stakeholders to close its stores and liquidate its assets.

The firm entered into an agency agreement with Hilco Merchant Resources, and Gordon Brothers Retail Partners last week, to liquidate all merchandise and dispose of certain furnishings, trade fixtures, equipment and improvements to real property with respect to its stores.

The company is seeking authority from the court to continue operating during the wind down, in addition to making wage and salary payments, continuing various employee benefits, and honouring certain customer programmes for a limited time.

Delia's has also negotiated a commitment for a US$20m debtor in possession credit facility with Salus Capital Partners, which provides for immediate liquidity to continue operations and to conduct the store closing and going out of business sales while in bankruptcy.

Last week, CEO Tracy Gardner, and COO Brian Lex Austin-Gemas, resigned with immediate effect. Ryan Schreiber was appointed as president and will continue in his capacity as general counsel and secretary. Edward Brennan was appointed as CFO, having previously served as the VP of finance.