The late 90s and early 2000s will always be remembered for the bold fashion choices they presented to the up-and-coming youth of the day. While grunge might have been falling out of favor, skater- and surfer-inspired jeans and tees dominated preteen looks for the better part of a decade.
However, Pacific Sunwear’s bankruptcy filing puts a lid on that questionable era of fashion.
The apparel retailer announced on Thursday (April 7) that it had officially filed for Chapter 11 protection. PacSun will transfer 65 percent of its debt into equity, and private equity group Golden Gate Capital has agreed to provide $20 million as a result of the firm taking extant PacSun operations private. PacSun CEO Gary Schoenfeld put a brave face on the news, noting that, though it may take a while, Golden Gate will prove a worthy ally in the chain’s fight to regain profitability.
“The plan negotiated with Golden Gate Capital and approved by our board of directors places PacSun in a very promising position as we continue the brand and merchandising transformation that our team has worked relentlessly to achieve,” Schoenfeld said. “Golden Gate Capital is a private equity investment firm with over $15 billion of capital under management and a tremendous track record of success. Their deep familiarity with our business, retail expertise, financial strength and industry experience makes them an exceptional equity partner for us going forward. Importantly, great brand partnerships will remain paramount to PacSun’s success, and the plan provides for all key suppliers to be paid in full following the effective date of the plan.”
Despite the optimism, things are far from it at the moment for PacSun. The New York Times noted that the retailer lost $10 million in Q4 2015 alone, with a 2.6 percent decline in sales over the course of the full fiscal year. Still, Schoenfeld and PacSun claimed between $50 million and $100 million in assets.
Its liabilities, though, range anywhere from $100 million to $500 million.