Many of our Escondido readers are probably familiar with the teen-oriented clothing retail chain known as "Wet Seal." There are several Wet Seal locations throughout the local area, and the company is actually based out of Orange County. But, it appears that this company, which has retail locations throughout the country, is facing some serious financial difficulties. As a result, the company recently filed for Chapter 11 bankruptcy.
The good news, however, is that the company appears to be determined to reverse its financial fortunes. In filing for Chapter 11 bankruptcy, the company signaled its intent to remain in operation as the bankruptcy process plays out. But, the bad news is that part of this plan includes closing hundreds of stores and laying off thousands of employees throughout the country. Of the over 500 retail locations that the company had in operation at the time of the business bankruptcy filing, the company plans to close 338. Approximately 3,700 employees will reportedly be laid off.
The financial problems that Wet Seal is facing have apparently been foreshadowed for much of the past year. According to reports, the company's stock fell some 98 percent over the last 12 months or so. Even worse, there have apparently been some reports that employees were not being paid.
A Chapter 11 bankruptcy filing can be a good option for a company that people believe in. If the decision makers think that the right moves can be made going forward after a bankruptcy filing is completed, there may yet be hope that the company can return to profitability.
Source: patch.com, "Wet Seal Files for Bankruptcy," Paige Austin, Jan. 18, 2015