A bankruptcy court judge today signed off on Pacific Sunwear of California Inc.’s bankruptcy plan, effectively capping the Anaheim, Calif. retailer’s reorganization.
The company can now emerge from bankruptcy with new owners in San Francisco private equity firm and senior lender Golden Gate Capital, which stepped up as the sole bidder in an auction originally scheduled for the summer. The process was ultimately canceled when no other interested parties emerged.
Pacific Sunwear filed for Chapter 11 in April as it looked to trim its debt levels and reduce its real estate footprint. At its peak the business totaled nearly 1,000 stores about a decade ago and was just over 590 stores nationally at the time of its bankruptcy filing.
The retailer pointed to a number of factors for its ailing business including the shift away from mall shopping to online; increased competition; more teens choosing to spend their money on technology and experiences, and the decline of the action sports industry, where PacSun stores initially found its footing and traction in the Nineties. There were also missteps made by past management, the company said in its disclosure statement, that also negatively impacted the business, including the halt in sneaker sales, focus on in-house brands and the acquisition of the D.e.m.o. retail chain, which the company ultimately shuttered in 2008.
The retailer’s bankruptcy followed those of Wet Seal, American Apparel, Quiksilver, Deb Stores and Delia’s. Since then, other retailers to also seek shelter in bankruptcy filings include Aeropostale and Sports Authority.