Canadian retailer YM in bid for bankrupt U.S. peer Wet Seal -source

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By Jessica DiNapoli

<span class="articleLocation”>Toronto-based retail operator YM Inc is
preparing to submit an offer for the intellectual property of
The Wet Seal LLC, as the 55-year-old U.S. teen retailer grapples
with its second bankruptcy in the past two years, according to a
person familiar with the matter.

YM, which owns Canadian chains Stitches, Sirens and Suzy
Shier, plans to submit a stalking-horse bid for Wet Seal’s
intellectual property, the person said on Tuesday, asking not to
be identified because the deliberations are confidential. A
stalking horse bid sets the minimum price for other possible
offers.

Bids for Wet Seal are due later on Tuesday, according to the
website for Hilco Streambank, which was hired to sell Wet Seal’s
intellectual property.

A spokeswoman for YM did not immediately return a request
for comment. Versa Capital Management, the private equity owner
of Wet Seal, declined to comment.

Wet Seal filed for bankruptcy in February with liabilities
between $50 million and $100 million after it failed to find
financing to continue as a going concern. It sought court
protection without a buyer in hand, and said it planned to sell
all of its assets.

Other U.S. specialty retail chains, including The Limited,
American Apparel and Aeropostale, have also filed for bankruptcy
in recent months, as fast-fashion competitors including Zara and
H&M attract their young female customer base.

Wet Seal has been holding going-out-of-business sales at its
approximately 142 shops, according to bankruptcy court papers.

For much of the 1990s, Wet Seal enjoyed growth through the
acquisition of chain Contempo Casuals and the launch of line
Arden B. But it then fell victim to the rise of fast-fashion,
causing it to file for its first bankruptcy in 2015. Versa
subsequently acquired Wet Seal out of its first bankruptcy.

YM has already been active in the United States. An
affiliate of YM bought the parent company of women’s chains
Mandee and Annie Sez out of bankruptcy about four years ago, an
acquisition that also saved their store locations.

Wet Seal shoppers on Tuesday were lamenting the closure of
the teen retailer’s shops and website with postings on Twitter
Inc.

Twitter user @tayfowlz tweeted “My heart is broken gbye wet
seal.” Wet Seal’s website featured the message “Thanks babe,
it’s been real.”



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