U.S. Bankruptcy Court Judge Christopher S. Sontchi today in Delaware approved the sale of Wet Seal Inc. to private equity firm Mador Lending LLC.
The affiliate of Philadelphia-based Versa Capital Management LLC surfaced as a winning bidder for Wet Seal during a multi-day auction that concluded on March 12. Mador offered $7.5 million in cash for unsecured creditors and $20 million debtor-in-possession financing, beating out Los Angeles-based investment bank B. Riley Financial Inc.’s offer of $5 million in cash and $25 million DIP financing, in exchange for an 80% equity stake.
Mador said it plans to provide $10 million in exit financing to the retailer at the close of the sale, and spend another $10 million to $15 million on a variety of obligations and liabilities.
Wet Seal filed for Chapter 11 bankruptcy in January, reporting $92.8 million in assets and $103.4 million in debts as of Nov. 1, 2014, closed 338 stores, and laid off nearly 3,700 employees. It currently operates 173 stores in 42 states.