Former Wet Seal gets $4 million payout with credit letter stipulation

By Kali Hays

New York, June 23 – Seal123, Inc., formerly Wet Seal, Inc., won approval of a stipulation providing for the remittance of $4.04 million from a drawn letter of credit, according to a Wednesday order from the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the credit was drawn by CIT Group/Commercial Services, Inc., which represented several clients that were vendors of Wet Seal prior to the company filing for Chapter 11.

CIT asked that a $6 million letter of credit be issued to assure financial accommodations were met. The letter was issued by Bank of America, NA.

After the company entered bankruptcy, CIT drew on the full amount of the letter and has since used $1.96 million toward payment of some open accounts, but Wet Seal claimed that the $4.04 million remaining is owed to the company, according to the motion.

With the stipulation, CIT will return the balance of the letter to Mador Lending, LLC, as the buyer of substantially all of Wet Seal’s assets, within seven business days of the approval order.

The stipulation also bars all parties from any current or future claims against one another.

Wet Seal, a Foothill Ranch, Calif.-based clothing retailer, filed for bankruptcy on Jan. 15 under Chapter 11 case number 15-10081.

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