After announcing last week that it would close all of its 171 stores in 42 states, teen retailer Wet Seal filed Chapter 11 in U.S. Bankruptcy Court for the State of Delaware.
This is Wet Seal’s second Chapter 11 filing. It emerged from its previous reorganization attempt in December 2015.
Documents filed with the court state, “After attempts to develop going-concern restructuring options proved unsuccessful, the debtors determined, upon consultation with their key constituents, that commencing going-out-of-business sales… provided the best opportunity to maximize value for the estates, creditors and all interested parties.”
The court documents also state that the consultants will honor gift cards and merchandise credits that were issued by or on behalf of the debtors before January 23, 2017, provided such return or exchange comply with the policies and procedures that were in place when merchandise was purchased.
Court papers say Wet Seal has 399 full-time employees and 1,357 part-time employees. Store employees will be working under the supervision of the liquidators for the final round of sales.
Wet Seal is backed by private-equity firm Versa Capital Management, which bought the company out of its 2015 bankruptcy for $7.5 million in cash.
Wet Seal is being represented in Chapter 11 by law firm Young Conaway Stargatt & Taylor and advised by Berkeley Research Group.
The current Chapter 11 petition indicates the company has assets of $10 million to $50 million.
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