Apparel line Wet Seal (NASDAQ:WTSL) has received a notice of default on $27 million in senior convertible loans. Last month the chain announced there was doubt it could continue operating and now it owes $28.8 million, plus costs of collection, attorneys' fees and disbursements.
The creditor, Hudson Bay Master Fund, entered an agreement with the brand that lasts until Jan. 12, giving the retailer a two-week reprieve, reported Bloomberg.
Wet Seal has lost more than $150 million in the past two years and is expected to lose another $88 million in fiscal 2015. Difficulties are attributed to the growing popularity of fast-fashion retailers such as H&M, as well as a slowing down of mall traffic.
On Dec. 12, the company announced it had assembled a team to identify and analyze potential strategic and financial alternatives, a sign that the teen apparel retailer could file for Chapter 11 bankruptcy protection. The team consisted of Houlihan Lokey as an investment banker and William Langsdorf as a senior advisor.
Wet Seal has appointed several new executives in the past few months, including CEO Ed Thomas, to orchestrate a turnaround. It has also been closing stores, eliminating brands and cutting costs.
-See this Bloomberg article
Wet Seal to reduce staff, cut costs
Wet Seal taps PacSun exec as executive VP and chief merchandising officer
Wet Seal to close Arden B, expand plus-size juniors
Wet Seal adds mobile payments with a teenage twist
Wet Seal appoints three new board members