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PacSun Exits Bankruptcy With Most Stores Still Open

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Bucking the trend of retail bankruptcies that result in either total liquidations or severe cutting of stores, Pacific Sunwear of California (PacSun) has emerged from bankruptcy with nearly the same physical footprint as before its April 2016 filing. But that doesn’t mean the mall-based teen retailer is completely unscathed. Hundreds of store locations were closed and the retailer reversed its expansion plan before filing for Chapter 11 protection.

Under a reorganization plan approved by the U.S. Bankruptcy Court in Delaware Sept. 6, PacSun will give all its stock to affiliates of private equity firm Golden Gate Capital, its senior lender. Golden Gate will reduce the amount PacSun owes from $88 million to approximately $30 million, and the firm has agreed to invest $20 million in the company — most likely in the form of new debt, according to Bloomberg.

PacSun had 593 stores when it entered bankruptcy in April 2016. Since then the retailer has closed approximately 10 locations and negotiated better rent deals for its stores with mall landlords. Currently, PacSun operates 583 stores in all 50 states and Puerto Rico.

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While it’s certainly possible that more closings will be in the cards, PacSun appears to have endured its bankruptcy fairly well. That’s in contrast to Sports Authority, Hancock Fabrics and Sport Chalet, all of which have been effectively liquidated following their bankruptcy filings. The same fate seemed to be in store for Aéropostale until a consortium stepped in, allowing the retailer to keep open 229 of the approximately 800 stores it had operated prior to filing for bankruptcy in May 2016. A bankruptcy judge still must review the terms of the Aéropostale deal before it is finalized.

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