NO DISTRIBUTION TO STOCKHOLDERS: The Wet Seal Inc., which is set to be acquired by an affiliate of Versa Capital Management via its purchase of the teen retailer in a bankruptcy court auction, said Tuesday in a regulatory filing, a Form 8-K, with the Securities and Exchange Commission that it “does not expect to be able to distribute any proceeds to the company’s stockholders and therefore believes that the shares of its common stock are worthless.”
In many bankruptcies, shares of public firms often become worthless. Whether there will be anything left to distribute to unsecured creditors, who are higher than stockholders in the financial food chain, is still unclear. In addition, the SEC filing said the affiliate of Versa will be responsible to pay B. Riley Financial, which was the stalking-horse bidder, a $625,000 break-up fee per the terms of the asset purchase agreement. Wet Seal filed its voluntary petition for Chapter 11 bankruptcy court protection in January in Delaware.