The Anaheim, Calif.-based retailer received the OK from a bankruptcy court judge Friday to use up to $62.5 million of the debtor-in-possession financing secured from Wells Fargo to be used for operations as it wends its way through bankruptcy proceedings. That’s in addition to a $100 million five-year revolving line of credit from Wells Fargo once Pacific Sunwear emerges from bankruptcy, which the retailer estimated in court documents could happen in early August.
The company’s bankruptcy filing had been expected following reports in March that it had hired financial advisors. The company said last week, restructuring under bankruptcy allowed it to address a looming long-term debt obligation that would have been due later this year as well as costly store leases.
Pacific Sunwear, which counts 593 stores, has been operating in a tough retail environment and is the latest in a string of industry bankruptcies that have included Wet Seal, Quiksilver and American Apparel.
The company’s disclosure statement otherwise applauded the current management team’s efforts to improve the business. Those efforts began in 2009 with the appointment of current chief executive officer Gary Schoenfeld who implemented a number of strategies to improve the business, including a reduction of the PacSun store footprint, playing up heritage action sports brands in stores and in more recent years an increase in in-house brand offerings.
The company’s proposing a June 22 auction should competing offers come in to buy the business out of bankruptcy.