Wet Seal is the third teen apparel retailer to file for Chapter 11 bankruptcy protection in an effort to keep its remaining stores open. Delia’s and Deb Stores both filed for bankruptcy during the 2014 holiday season.
Last week, Wet Seal announced its plan to shutter 338 stores and lay off approximately 3,700 employees. However, the retailer plans to keep its remaining 173 stores open during the bankruptcy.
Wet Seal has arranged a loan facility through B. Riley Financial Inc. worth up to $20 million, which will be allocated to paying vendors and landlords. However, the funding must be approved by the U.S. Bankruptcy Court for the District of Delaware.
Shares for the retailer tumbled to 5 cents on Friday, Jan. 16.
Over its more than 50-year history, Wet Seal has evolved from a bikini shack in California, to a destination for teen girls’ apparel, shoes and accessories. After going public in 1990, Wet Seal expanded by acquiring various brands, including Arden B. and Contempo Casuals.