Orange County-based Wet Seal files for Chapter 11 bankruptcy
January 17, 2015
Foothill Ranch, Ca – The economy hasn’t quite turned around for everyone yet.
Wet Seal, a company based out of Foothill Ranch and self-described as offering “the most current fashions for teens”, is the latest mall retailer to decide bankruptcy was their best chance at staying afloat.
Just last month, Delia’s and Deb Stores also filed.
The announcement follows one last week stating they were to be closing around two-thirds of their retail locations (338 stores, to be precise).
Wet Seal is a long established facet of the young adult fashion industry, with roots dating back to its 1962 inception as a Newport Beach bikini shack.
Wet Seal’s bankruptcy filing indicates they believe their assets to be between $10 and $50 million, compared with liabilities between $100 and $500 million. The company says that in order to keep doors open, they have negotiated a $20 million loan with B. Riley Financial Inc, though it needs approval through the US Bankruptcy Court before the loan is truly secured.
This loan would also see B. Riley become the majority stockholder following the company’s bankruptcy exit, with an 80-percent stake agreed upon.
Wet Seal, among other fashion retailers, have found it difficult to compete in the face of fashion juggernauts like Forever 21 and H&M who can offer low-priced styles.
The company shot itself in the foot last year when it spent a reported $25 million to buyback shares from stockholders for up to $4 per share. Those shares now, as of writing this article, are worth a measly $0.04 each.
Bankruptcy can happen to anyone – from a multi-million dollar enterprise half a century old, to one of the largest cities in the US, to a family of four just trying to make ends meet. It’s important to begin planning for bankruptcy early and with a qualified individual.
Lawrence P. Bellomo is a Laguna Hills attorney with over 30 years successfully practicing family and bankruptcy law in Orange County. If you are considering declaring bankruptcy, give us a call or send us a message today to receive a 100% free no obligation consultation.