Charlotte Russe could kick off closing sales next month at all of its remaining stores if it doesn't find a buyer

Business Insider/Mary Hanbury

Charlotte Russe's fate depends on the outcome of a bankruptcy auction next month.

• Charlotte Russe said Tuesday that it's in talks with potential buyers for a going-concern sale that would avoid a total liquidation.
• At the same time, the company is seeking court approval for a liquidation plan in case no bids for the business are accepted.
• If Charlotte Russe liquidates, closing sales would begin March 7 at 416 Charlotte Russe stores and 10 Peek Kids stores, according to an agreement reached on Sunday.

Charlotte Russe said Tuesday that it's in talks with potential buyers ahead of an upcoming bankruptcy auction that could keep the company from liquidating.

At the same time, the women's clothing chain is preparing for the possibility of a liquidation and seeking court approval for a plan to close all its remaining stores.

Competing bids for the business as a going-concern sale are due March 3, and an auction is scheduled for March 5, the company said.

"The company remains in active discussion with prospective bidders to effectuate a going-concern sale of
the business to avoid the liquidation of substantially all of the company's assets," Charlotte Russe said in a statement on Tuesday.

If no bids are accepted, closing sales at the more than 400 remaining stores would begin March 7 and run through April 30 at the latest, according to an agreement that Charlotte Russe reached on Sunday with a joint venture of Gordon Brothers Retail Partners and Hilco Merchant Resources.

Charlotte Russe and the joint venture kicked off closing sales at 94 stores earlier this month, after the company filed for Chapter 11 bankruptcy protection.

Read more: Charlotte Russe plans to close 94 stores as it files for bankruptcy - here's the full list

A bankruptcy judge is scheduled to review the liquidation agreement at a hearing scheduled for Wednesday morning in the US Bankruptcy Court for the District of Delaware.

This is Charlotte Russe's second bankruptcy filing in as many years.

Reshmi Basu, an associate editor at Debtwire, said it will be "very challenging" for the retailer to avoid a liquidation this time around.

"We're seeing a lot of these companies re-entering bankruptcy court, and it's ending tragically for them," she said.

Gymboree and Payless ShoeSource, for example, recently announced liquidation plans after filing for bankruptcy protection a second time.

For now, the fate of Charlotte Russe depends on the outcome of the bankruptcy auction next month.