Versa Capita Management wins bidding race over Wet Seal

Philadelphia-based capital firm Versa Capital Management has been the winning tender in a close bidding race to acquire teen clothing retailer Wet Seal, which filed for Chapter 11 bankruptcy two months ago.

“We believe our agreement with Versa provides the best possible outcome for our creditors, employees, customers and other constituents,” Wet Seal CEO Ed Thomas said in a statement.

Thomas added that at the moment, “We are focused on executing an orderly emergence from bankruptcy court supervision and collaborating with Versa to improve the operational and financial performance of the business.”

As revealed by the own equity firm, Versa Capital Management LLC will be acquiring the business of the troubled apparel retailer.

Versa’s winning bid includes replacement debtor-in-possession financing, which will be presented for Court approval at a hearing scheduled on March 18, 2015, in the United States Bankruptcy Court for the District of Delaware (the “Court”).

“Versa Capital is pleased to have prevailed in our effort to acquire Wet Seal’s business,” said Greg Segall, Chairman and CEO of Versa. “We have been assessing the dramatically shifting landscape in Wet Seal’s category for more than a year and determined that Wet Seal, among the many companies we evaluated, was best positioned in the marketplace, and thus we pursued this deal with determination.”

Versa’s bid pending on Bankruptcy Court’s approval

Versa’s bid will be presented Wednesday in the United States Bankruptcy Court for the District of Delaware for approval.

“We now look forward to working with CEO Ed Thomas and the rest of the dedicated Wet Seal team to conclude the transaction and pursue the many opportunities for growth and profitability now available under Versa’s ownership,” added Versa´s CEO in a note.

In January, Wet Seal abruptly closed two-thirds of its stores and filed for bankruptcy a week later. It is worth to remember that prior to calling it a day, the Californian retail group had been dealing with a series of management changes amid a restructuring plan in 2013. That followed a proxy battle in 2012 with an unhappy investment group, recalls local media.

Wet Seal had estimated its assets to be between 10 million and 50 million dollars, according to its bankruptcy filing, with liabilities between 100 million and 500 million dollars.

No financial terms were disclosed although it is of public knowledge that Klee, Tuchin, Bogdanoff & Stern LLP, Paul Hastings LLP and Houlihan Lokey Capital are advising Wet Seal while Klehr Harrison Harvey Branzburg LLP and KPMG LLP are advising Versa.