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Pacific Sunwear files for Chapter 11 bankruptcy protection

While the nation’s economy appears to be growing at steady, yet slower pace, some retailers are finding it difficult to take advantage of such growth. In a prior post, we highlighted the plight of surfwear retailer Quiksilver through Chapter 11 bankruptcy. Now, a similar company is experiencing this reality.

According to a recent report, Anaheim based beach wear retailer Pacific Sunwear of California  (aka PacSun) has filed Chapter 11 bankruptcy protection. The likelihood of a California company that sells beach wear going bankrupt appeared to be just as unlikely as a tech company going belly up; but like other retailers of its ilk, bankruptcy is likely to be the reboot the company needs to adapt to the changing landscape of the retail business. 

Basically, PacSun has had a difficult time keeping up with “fast fashion” which is the name given to retailers that are able to quickly cycle through fashion trends and stay abreast of the latest and most popular clothes. Online retailers are better positioned to do this while traditional brick-and-mortar companies struggle with this new reality. For PacSun, the waning popularity of surf and skate wear ultimately caught up with it.

To deal with the new marketplace, PacSun plans to streamline its operations through a private equity firm, much like its sister companies, Quiksilver and Wet Seal; both of which went through Chapter 11 bankruptcy and emerged as smaller companies.

It remains to be seen whether PacSun’s reorganization plan will be as successful, but it exemplifies the need for experienced legal counsel when changing the direction of a company through bankruptcy. 

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