Dive Brief:

• After years of employee layoffs and accusations of workplace improprieties, quirky apparel retailer Nasty Gal has filed for Chapter 11 bankruptcy, Women's Wear Daily reports.

• "Our decision to initiate a court-supervised restructuring will enable us to address our immediate liquidity issues, restructure our balance sheet and correct structural issues including reducing our high occupancy costs and restoring compliance with our debt covenants," CEO Sheree Waterson said in a statement. "We expect to maintain our high level of customer service and emerge stronger and even better able to deliver the product and experience that our customers expect and that we take pride in bringing to market."

• Nasty Gal founder Sophia Amoruso is resigning as executive chairman, sources told Recode. Amoruso stepped down as CEO in January 2015, handing the reins to Waterson, who previously served as president. Danny Rimer, a partner at major investor Index Ventures, a venture capital firm, is also expected to resign from the board of directors. Amoruso and Rimer have not responded to requests for comment.

Dive Insight:

Nasty Gal, which garnered a vote of confidence in February 2015 in the form of a $16 million Series C funding round led by former Apple retail guru (and failed J.C. Penney CEO) Ron Johnson, has been marked from the start with the defiant and entrepreneurial spirit of its founder. As recounted in her book "Girlboss" (in the works as a Netflix production), Amoruso got her retail start in her early 20s, selling vintage fashions and other finds — sometimes purchased, sometimes shoplifted — on eBay, and turned that into a respectable e-commerce enterprise.

Even before Johnson led the investment round, he helped Nasty Gal open its first store on Los Angeles' Melrose Avenue. A second location followed in May 2015.

But Nasty Gal has been beset by reports that it cheated employees of benefits like maternity leave, and received critical reviews for a collaboration with controversial singer Courtney Love. Nasty Gal has also failed to grow beyond its cult following among young millennial women favoring its edgy apparel and sensibilities, and like many other e-commerce sites has struggled in the face of competition from fast-fashion brands like Forever 21 and Zara, which are nimble enough to react to new apparel trends and quickly change up their merchandise.

Earlier this year Nasty Gal cut another 10% of its staff, which Waterson characterized as “strategic restructuring," and by late summer, the retailer was reportedly looking for a buyer.