The liquidation of teen retailer Wet Seal LLC has begun in earnest with store-closing sales having commenced.The company, after reporting to the state Employment Development Department that it was shedding 148 jobs at its Irvine headquarters, is now in the process of liquidating its stores. It lists 171 locations across 42 states on its web site.“This decision comes only after the company had been actively seeking capital and exploring reasonable restructuring opportunities and believed that it would continue to obtain financing to allow operations into the foreseeable future,” Wet Seal vice president and general counsel Michelle Stocker told the state in the company’s written explanation of the layoffs, which was obtained by WWD. “Unfortunately, the company was unable to obtain the necessary capital or identify a strategic partner, and was recently informed that it will receive no further financing for its operations. As a result, the company has no alternative but to proceed with an orderly liquidation.”A company spokeswoman, along with chief executive officer Melanie Cox, did not respond to requests for comment. A spokeswoman for Versa Capital Management LLC, which acquired the company out of bankruptcy in spring 2015, also declined comment.Calls to 11 of the company’s stores, most of them in California, provided additional confirmation that the brick-and-mortar fleet is being shuttered along with the online operation. Most of the store associates had little information on when their respective stores would close, with the majority saying they would remain open until inventory was cleared.One Northern California associate said her store would be open for the next three months, while two others in Southern California said customers are urged to come in sooner rather than later if they want to buy merchandise or spend gift cards.Wet Seal is running a 20-percent-off storewide promotion in stores and online.The moves are similar to The Limited, which began closing stores earlier this month and last week filed for bankruptcy.January has been a rough month for retailers with BCBG Max Azria Group LLC saying it would focus less on brick-and-mortar as it turned to shop-in-shops at other retailers, the online channel and licensing deals. American Apparel, which filed for bankruptcy twice and is in the midst of winding down operations as it transitions to new ownership, laid off 2,400 workers this month. Macy’s Inc. will cut about 10,000 jobs and shutter 63 stores by the spring.
Jasmin Yang, an associate at the law firm Snell & Wilmer, said a restructuring can happen in or out of court with a number of factors to be weighed in that decision, including whether a bankruptcy filing could unearth additional prospective buyers that had initially been marketed to. “In terms of keeping the business alive as a going concern, it looks like they’ve given up on that,” Yang said. “A lot of times, when companies go out of business and they shut their doors, they do so without a bankruptcy filing and so this is the end. Whether the end is supervised by a bankruptcy court or not still remains to be seen.”
Last week, Wet Seal notified the state it would shed 148 workers by March 21.It’s unclear just how well the business had picked up following its emergence from Chapter 11 in 2015.
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