Troubled Orange County retailer Wet Seal Inc. filed for Chapter 11 bankruptcy, a week after it closed two-thirds of its locations and laid off thousands.
The Foothill Ranch company said Friday that it reached a loan agreement with B. Riley Financial Inc. to keep operating its business while in bankruptcy protection.
The retailer now has 173 locations and its online business.
"After careful consideration, the board of directors unanimously concluded that filing for Chapter 11 was the appropriate course of action for the company,” Chief Executive Ed Thomas said in a statement. “Overall, we continue to believe in the Wet Seal and remain committed to executing on the strategic steps that we already started.”
The funding agreement with B. Riley needs court approval.
Wet Seal, which specializes in beachy fashions for young women, suffered in recent years as parents cut back on allowances for their children and older teenagers battled unemployed adults for part-time jobs. Newer "fast-fashion" retailers -- Forever 21, H&M and Zara among them -- have profited from their ability to jump quickly and cheaply on the latest trends.
Wet Seal in December said there was "substantial doubt" it could continue operating. Last week, the firm laid off nearly 3,700 employees and closed 338 of its stores.
B. Riley would become Wet Seal's majority stockholder after it reorganized and left bankruptcy protection.
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Staff Writer Shan Li contributed to this report.