Damp Seal Inc ended up being the fourth United States garments store to file for bankruptcy in 2 months as the industry has a hard time with growing competition and reduced costs by teen shoppers.
The company said its change away from fast-fashion garments, unlucrative ventures and a liquidity crunch as a result of weak sales and also adjustments in vendor credit report agreements led to the personal bankruptcy.
A number of teenager garments sellers have actually been battling as customers switch over to fast-fashion brand names such as H&M, Forever 21 and Inditex's Zara as well as online merchants such as Amazon.com Inc which use deep discounts.
Deborah Shops applied for personal bankruptcy on 4 December, followed a day after by Delia * s Inc. Mall-based garments retailer Body Central Corp likewise shut shop this month.
Damp Seal, which markets clothing and also accessories for teen ladies and girls, given up 3,700 employees and closed 338 shops last week. It had 7,413 employees a year ago.
Influenced employees submitted a class-action lawsuit on Thursday, implicating Wet Seal of violating the Worker Adjustment and also Retraining Notification that needs employers to advise employees of impending mass discharges.
"Despite solid evidence that Wet Seal was in high decrease, it continued to maintain its employees unenlightened ... workers were told not to look for other tasks which the stores were merely redesigning," the claim stated.
The plaintiffs looked for 60 days' pay as well as advantages.
Damp Seal as well as its lawful lawyers were not instantly available for comment.
The business, which reported reducing sales growth for the past five quarters, advised last month that it may file for bankruptcy security if it failed to attend to liquidity concerns.
The firm said it received $20m in debtor-in-possession funding from B Riley Financial Inc. It means to rearrange its organisation around ecommerce and also its continuing to be 173 shops.
Damp Seal, established in 1962, provided assets of $10m--$50m and also responsibilities of $100m--$500m in its Chapter 11 insolvency declaring late on Thursday. It has actually hired FTI Consulting Inc as restructuring consultant.
With those in power failing us ...
With those in power failing us ...
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