Apr 7, 2016
Pacific Sunwear files for Chapter 11 bankruptcy protection
Apr 7, 2016
Struggling teen apparel retailer Pacific Sunwear of California Inc filed for Chapter 11 bankruptcy protection on Thursday, succumbing to mounting losses and intense competition in the industry.
The Anaheim-based retailer listed assets in the range of $50 million to $100 million, and liabilities of between $100 million and $500 million, according to a court filing.
Pacific Sunwear said private equity firm Golden Gate Capital had agreed to convert more than 65 percent of its debt into equity of the reorganized company and provide a minimum of $20 million in additional capital.
Golden Gate Capital had lent PacSun about $60 million in 2011.
PacSun also listed sportswear maker Nike Inc (NKE.N) and mall operator Simon Property Group Inc (SPG.N) among its top creditors.
The company owes Nike $5.7 million and Simon Property $3.8 million for occupancy charges.
Among PacSun's top investors are investment firm GI2 Ltd, which owns a 28.6 percent stake, and Adage Capital Management LP with a 14.1 percent stake.
PacSun said it would continue to operate all of its 600 stores and does not expect the bankruptcy filing to have an immediate impact on employees.
The company also said it had a debtor-in-possession credit agreement of $100 million with Wells Fargo Bank.
In a separate filing, subsidiary Pacific Sunwear Stores Corp listed assets of $100 million to $500 million and liabilities of $100 million to $500 million.
PacSun, which sells the Kendall and Kylie Jenner clothing line, has been able to report a profit only once in the past six quarters, as intense competition from fast-fashion retailers and online rivals has led to slower sales growth.
Rival Aeropostale said in March it was exploring strategic alternatives, including a sale.
PacSun said fourth-quarter sales rose 0.5 percent to $232.9 million.
The case is in the United States Bankruptcy court, District of Delaware, Case No: 16-10882.
The company's shares fell 11 percent to 8 cents in premarket trading. The stock had fallen 96.6 percent in the past 12 months as of Wednesday's close.
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