The Foothill Ranch, Calif., company and three subsidiaries submitted their petitions in the U.S. Bankruptcy Court for the District of Delaware in Wilmington late on Thursday, Jan. 15.
In a Friday motion, Wet Seal requested permission to tap a $20 million debtor-in-possession loan from B. Riley Financial Inc. so that it could keep the lights on at its remaining open locations and fund its Chapter 11 case. Additionally, Wet Seal hopes to roll up $10.83 million in debt with Bank of America NA into a separate DIP that also would give the debtor $7.5 million in new postpetition financing.
Court papers show B. Riley would sponsor a reorganization plan under which the DIP lender would receive 80% of the reorganized debtor's equity.
"We are pleased to provide financial assistance to The Wet Seal in its efforts to revive this iconic fashion retailer," B. Riley chairman Bryant Riley said in a Friday statement. "Taking a collaborative approach, and tapping our vast array of financial services, we believe that we have developed a financial solution that should benefit all parties involved."
The Los Angeles company owns investment bank B. Riley & Co. LLC as well as Great American Group LLC, which frequently liquidates inventory for bankrupt retailers.
Judge Christopher S. Sontchi has not set a hearing on first-day motions, including requests for joint administration of the cases, interim use of the DIPs, and permission to keep paying employee wages, use its bank accounts and continue certain prepetition customer reward programs.