The Philadelphia-based private equity firm, whose portfolio includes retailers Avenue Stores and Vestis, has invested an initial $10 million in the clothing chain’s operations and will take over at least 140 of its stores.
“We believe our agreement with Versa provides the best possible outcomes for our creditors, employees, customers and other constituents,” Wet Seal CEO Ed Thomas said in a statement. “We are focused on executing an orderly emergence from bankruptcy court supervision and collaborating with Versa to improve the operational and financial performance of the business.”
In January, Wet Seal closed 388 of its stores, laying off 3,695 full- and part-time employees jobless, and filed for bankruptcy a week later.
Versa’s winning bid beat out Los Angeles-based B. Riley Financial Inc. and frees Wet Seal from having to pay a $35 million claim to unsecured bondholder Hudson Bay Capital, according to The Wall Street Journal. The deal includes $7.5 million in cash to be shared among vendors and landlords owed approximately $90 million and $10 million in exit financing.