Pacific Sunwear Receives Court Approval to Exit from Bankruptcy

by San Antonio Attorney

The bankruptcy exit plan of Pacific Sunwear has been confirmed by a court after reducing liabilities, shutting down some shops and persuading landlords to cut rent at the shopping malls where the chain is selling teenager clothing.

According to retail analysts, the result of PacSun’s bankruptcy is every struggling retailer’s aspiration.  However, it does not guarantee that the company will succeed in the end, experts say.

When it filed for bankruptcy, it had a total of 593 shops, and nine of them were located in Orange County.  Right now, there are 583 stores that are operating.

The retailer’s the reorganization plan was confirmed by U.S. Bankruptcy Judge Laurie Selber Silverstein in Delaware on Tuesday.  PacSun is going to distribute 100 percent of its stock to affiliates of its senior lender, Golden Gate Capital.

In return, PacSun’s debt will be reduced from $88 million to $30 million.  Moreover, Golden Gate will invest $20 million in the newly acquired business.

Wells Fargo is also going to exten $100 million in credit line to PacSun for the next five years.

PacSun joined a number of American retailers to use bankruptcy lately and avoid closing or liquidating many of its stores.

This year, rivalry from online stores and superstores has forced numerous popular shopfront and chains based in malls into Chapter 11 bankruptcy.  Some of the retailers did not leave bankruptcy in a similar situation like PacSun.

Sports Authority Inc. sought for bankruptcy protection in March with plans to close 140 of its 463 locations, but end up having liquidation sales on all its stores.  Hancock Fabrics Inc. was sold to liquidators after failing to find a buyer for its stores.

Aéropostale, Inc. filed for Chapter 11 bankruptcy in May and its new owners will keep 229 out of its 800 stores from closing down.

 

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