Former Wet Seal eyes return of $590,991 from drawn letter of credit

By Kali Hays

New York, July 9 – Seal123, Inc., formerly Wet Seal, Inc., is seeking approval of a stipulation that will provide for the remittance of $2 million related to a letter of credit drawn by Rosenthal and Rosenthal, Inc., according to a Thursday motion with the U.S. Bankruptcy Court for the District of Delaware.

Rosenthal represented various vendors of Wet Seal and asked that a standby letter of credit be issued by Bank of America, NA in the amount of $2 million prior to the company filing for Chapter 11.

After the company entered bankruptcy, Rosenthal drew on the letter of credit in its full amount and paid $1.41 million toward some outstanding vendor accounts.

Under the proposed stipulations, Rosenthal has agreed to remit the remaining balance of the letter of credit totaling $590,991 to Mador Lending, LLC, as the buyer of substantially all of Wet Seal’s assets, within three business days of an order approving the motion.

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

As previously reported, Seal123 won approval of a similar stipulation at the end of June gaining a remittance of $4.04 million from CIT Group/Commercial Services, Inc. related to a drawn $6 million letter of credit.

A hearing on the stipulation is set for Aug. 14.

Wet Seal, a Foothill Ranch, Calif.-based clothing retailer, filed for bankruptcy on Jan. 15, 2015 under Chapter 11 case number 15-10081.

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