Wet Seal Files for Chapter 11 Bankruptcy Protection

by Katie Lee

Foothill Ranch, Calif. — The Wet Seal, Inc., a specialty retailer to young women, filed for voluntary Chapter 11 relief in Delaware on January 15, 2015.

The company will continue to operate its business as “debtors-in-possession” under the jurisdiction of the bankruptcy court.

“After careful consideration, the board of directors unanimously concluded that filing for Chapter 11 was the appropriate course of action for the company,” says Ed Thomas, CEO of The Wet Seal Inc.

In connection with the Chapter 11 cases, the company has negotiated a debtor in possession financing arrangement (DIP) and plan sponsorship agreement (PSA) with B. Riley Financial, Inc., the parent of B. Riley & Co, LLC and Great American Group, LLC and its affiliates and designees.

The DIP provides for a $20 million term loan facility, subject to certain limitations and conditions, including a $5 million availability block at closing, from B. Riley to be funded on an interim and final basis. This loan facility will provide availability to fund the company’s operations during the Chapter 11 cases, including to the company’s vendors and other purveyors of goods and services. The company also expects to continue to fund operations from cash on hand and cash generated during the cases.

The PSA provides a comprehensive blueprint for the company’s emergence from Chapter 11 as a going concern pursuant to a plan of reorganization, under which B. Riley has agreed to provide funding and will receive a majority of the stock in the reorganized company at emergence.

“We are pleased to provide financial assistance to The Wet Seal in its efforts to revive this iconic fashion retailer,” says Bryant Riley, chairman of B. Riley Financial, Inc. “Taking a collaborative approach, and tapping our vast array of financial services, we believe that we have developed a financial solution that should benefit all parties involved.”

As of January 15, 2015, The Wet Seal, Inc. operated 173 stores in 42 states and Puerto Rico and an e-commerce business at www.wetseal.com. For more information, visit www.wetsealinc.com.

For more information on B. Riley Financial, Inc., visit www.brileyfin.com.


SOURCE: The Wet Seal, Inc.

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