The Wet Seal Inc. will be under new ownership.
An affiliate of private-equity firm Versa Capital Management, Mador Lending LLC was selected as the successful bidder for the teen retailer in a bankruptcy-court-approved auction late Thursday, according to Delaware bankruptcy-court records. The selection of Versa is still subject to bankruptcy-court approval, which is slated for March 18.
Versa, which specializes in distressed investments, beat out stalking-horse bidder B. Riley Financial Inc.
The Foothill Ranch, Calif.-based retailer filed a voluntary petition for Chapter 11 bankruptcy court protection in Delaware, in late January. At the time, it inked a $20 million debtor-in-possession financing facility with B. Riley, with the plan for B. Riley to become the new owner, with an 80 percent stake, after converting the financing into newly issued common stock of the restructured firm.
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That’s now changed given the selection of Versa as the successful bidder, and the private-equity firm will need to obtain court approval for replacement DIP financing at Wednesday’s hearing. Proceeds from the auction are slated for use to pay the claims of Wet Seal’s unsecured creditors and for the satisfaction of administrative expenses and priority claims.
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Versa isn’t exactly new to the retail and apparel space. It owns Sport Chalet, Eastern Mountain Sports and Bob’s Stores. It also owns plus-size chain Avenue, which it acquired out of bankruptcy in 2012.
Wet Seal operates 173 stores and an Internet business that includes a 1.4 million active subscriber base. Founded in 1962, the company completed an initial public offering in July 1990. The chain was at its peak in the late Nineties and early Aughts, operating 575 stores, with about 375 of those being Wet Seal stores. Other nameplates were 85 Contempo Casuals, which it acquired and ultimately converted to Wet Seal stores. It also operated Arden B stores, which have since been shuttered.