New Hampshire residents may be interested to learn of the recent bankruptcy petition filed by clothing retailer Wet Seal. The bankruptcy petition was announced by the company on Jan. 16. A week prior, the chain announced it was closing nearly two-thirds of its retail stores, or 338.

The company reports it has assets between $10 million and $50 million, with outstanding liabilities of $100 million to $500 million. A majority of the company’s creditors are the various landlords for their retail store locations, while its biggest creditor is Hudson Bay Master Fund, Ltd. The company indicated that it has been approved for a loan through B. Riley Financial Inc. of $20 million needed to pay its landlords and vendors, but the loan will need to be approved by the U.S. Bankruptcy Court.

Wet Seal’s bankruptcy petition was filed in the hopes the company would be able to continue in business and keep its remaining stores running. If their debt reorganization is successful and their $20-million loan is approved, B. Riley will become the majority shareholder of the publicly traded company.

Chapter 11 bankruptcy is sometimes filed by businesses that, despite having significant income and assets, possess unmanageable liabilities. Chapter 11 may provide an option, as the business will be able to propose a plan of repayment. Remaining debts still owed at the end of the repayment plan other than secured debts will be discharged. The business will be required to submit reports as ordered by the bankruptcy court, as the court will oversee the business’s operation during the bankruptcy repayment period. Businesses that have income and assets but are overwhelmed by debt may want to consider Chapter 11 bankruptcy and an attorney’s assistance in lieu of closing.

Source: SF Gate, ” Wet Seal files for bankruptcy protection in an effort to stay afloat,” Jan. 16, 2015