Liquidator Gordon Brothers wins auction for Wet Seal -sources

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By Jessica DiNapoli

<span class="articleLocation”>Liquidator Gordon Brothers Group won the auction
on Thursday for the intellectual property of the Wet Seal LLC
with a bid of $3 million, besting the $1.5 million initial offer
from Canadian retailer YM Inc, people familiar with the matter
said.

Founded as a “bikini shack” in Newport Beach, California, in
1962, Wet Seal filed for bankruptcy last month with a plan to
close its approximately 142 stores located primarily in U.S.
malls. Hilco Streambank was hired to sell the teen retailer’s
intellectual property and brand.

Other U.S. specialty apparel chains, including the Limited,
American Apparel and Aeropostale, have also filed for bankruptcy
in recent months, as the retail sector undergoes a major
upheaval due to changing tastes and the advent of internet
shopping.

A U.S. bankruptcy court judge must still approve the sale,
the four sources said, asking not to be identified ahead of a
public announcement. Gordon Brothers and Versa Capital
Management, the private equity owner of Wet Seal, declined to
comment. YM did not immediately respond to a request for
comment.

Wet Seal filed for bankruptcy for the first time in 2015 as
it fell victim to the fast fashion-craze attracting the
attention of its young, female customer base. Versa bought Wet
Seal out of that bankruptcy, but failed to find financing for
the business to continue as a going concern.

Wet Seal filed its second Chapter 11 in February with
liabilities between $50 million and $100 million.

Gordon Brothers, primarily known as a liquidation firm, also
revives dormant brands it often acquires out of bankruptcy
through its brand investing arm.

The firm was part of a joint venture that bought electronics
brand the Sharper Image out of bankruptcy, which it later sold
to brand licensor Iconix Brand Group Inc for $65.6
million.

Gordon Brothers’ other brands have included home goods line
Linens ‘N Things and furniture label Bombay & Co. Gordon
Brothers also currently owns camera brand Polaroid.

Gordon Brothers had already been working on store closing
sales for Wet Seal with the help of liquidator Hilco Merchant
Resources LLC, according to bankruptcy court documents.

YM, which owns Canadian chains Stitches, Sirens and Suzy
Shier, made a stalking horse offer for Wet Seal earlier this
week.

An affiliate of YM bought the parent company of women’s
chains Mandee and Annie Sez out of bankruptcy about four years
ago.



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