US-based online fashion retailer Nasty Gal is preparing to file for Chapter 11 bankruptcy protection.

Nasty Gal founder Sophia Amoruso is resigning from her position as executive chairwoman while Index Ventures partner Danny Rimer will step down from the board, reported Recode.net.

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Cutting jobs both this year and last year, the clothing retailer is also facing lawsuits from former employees.

“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."

Founded in 2006 by Amoruso, Nasty Gal was as a vintage shop on eBay.  It has since expanded with approximately $100m in online sales, and two stores based in the Los Angeles area.  Amoruso ceded the role of CEO earlier this year.

The retailer was initially funded by Index Ventures, former JCPenny and Apple retail executive Ron Johnston, and several other investors. Nasty Gal is reportedly looking for new investors.

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Nasty Gal chief executive officer Sheree Waterson was quoted by Fortune as saying: "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.

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“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.”