Going-concern sale, liquidation among retailer’s options, sources say
Less than two years after being sold out of bankruptcy, teen retailer Wet Seal LLC is exploring a liquidation or going-concern sale, among other options, according to people familiar with the matter.
The mall-based retailer has continued to struggle and saw its sales suffer even after it cut down on the number of its stores as a result of its first bankruptcy filing in 2015, the people added.
Wet Seal’s private-equity backer, Versa Capital Management LLC, is considering a number of options for the retailer and nothing has been decided yet, the people said. Those options include a going-concern sale for either the retailer as a whole or just its online presence.
The firm is also considering liquidating all of its stores and solely operating as an online retailer, the people added. According to Wet Seal’s website, the chain has 171 stores in 42 states.
A restructuring, whether in or out of bankruptcy court, hasn’t been ruled out, the people added.
A Versa representative declined to comment Friday, and a Wet Seal representative couldn’t immediately be reached.
The retail industry, teen apparel in particular, has been distressed in recent years thanks to falling mall traffic. These challenges have prompted a number of retailers, including Aéropostale Inc. and Pacific Sunwear of California Inc., to turn to chapter 11 protection.
Wet Seal cited these challenges when it filed for chapter 11 protection in January 2015 after closing more than 300 stores, putting nearly 3,700 employees out of work.
Versa purchased Wet Seal’s remaining stores out of chapter 11 for $7.5 million in cash in a deal that closed in April 2015. At the time, the private-equity firm promised to keep at least 140 stores open and to provide $10 million in bankruptcy-exit financing.
By LILLIAN RIZZO
