Sophia Amoruso

Attorneys for Los Angeles-based Nasty Gal Inc. have asked for a hearing to weigh in on multiple emergency motions filed in court Thursday as the digital e-tailer’s bankruptcy case begins.

The company, which filed its petition for bankruptcy in Central District Court in California on Wednesday, wants court approval to tap a loan from Hercules Technology Growth Capital Inc. — a Palo Alto lender to venture-backed firms — in order to keep the business running and, at least in the short term, be able to make its next payroll Nov. 25. The payroll expense totals $512,000 across 189 workers, and there’s also the roughly $400,000 it spends weekly on merchandise to stock its online store and two physical shops on Melrose Avenue and Third Street Promenade.

Without court approval for use of the funds, the company would be unable to continue operations, forcing a liquidation that would likely generate about $10 million, according to a declaration filed in court by president and chief restructuring officer Joe Scirocco. The executive was tapped in September of this year to help Nasty Gal with a possible recapitalization, merger or sale.

Scirocco valued the business, if allowed to continue operations, at about $25 million.

The company’s first day set of motions provided a glimpse into the privately held business, which had given little details on the state of its operations in more recent years.

Nasty Gal capped the 12 months through Jan. 31, 2015, with $85 million in revenue and an earnings before interest, taxes, depreciation and amortization loss of $6.3 million, according to court documents. Challenges keeping pace with Nasty Gal’s growth, along with a drop off in international sales were cited for the declines. The following 12-month period ended Jan. 30, 2016 saw net revenue fall to $77.1 million and negative EBITDA of $15.4 million.

Projections for the current fiscal year ending Jan. 27 call for net revenue of $77 million and negative EBITDA of $1.4 million.

The company, which has raised $65 million to date, began actively searching for a buyer in May 2015 with the help of Peter J. Solomon but its declining business was a tough sell. November of last year saw a $15 million loan from Hercules followed by a $5 million bridge in April of this year from Stamos Capital, but the money did little to solve Nasty Gal’s troubles.

Efforts to sell the business have been hampered by what Scirocco said in his declaration was a “complex capital structure, significant aging of Nasty Gal’s existing accounts payable, strained vendor relationships that have disrupted the normal flow of merchandise and the need to further right-size its staff and facilities.”

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