Nasty Gal approved for temporary loan to continue operations
Nasty Gal has obtained temporary loan approval so business operations can continue.
The Los Angeles-based online retailer, founded by Sophia Amoruso in 2006, filed a petition for Chapter 11 bankruptcy protection at the Central District of California last week (ends13Nov16).
Nasty Gal asked a judge to expedite approval of money for expenses such as payroll and merchandise for its online store and two physical boutiques, with the funds coming from a $20 million loan secured in November last year (15) from lender Hercules Technology Growth Capital Inc.
In court last Friday (11Nov16), Hercules filed a motion against Nasty Gal in an effort to halt the retailer's emergency request to dip into the loan, alleging that the e-commerce site rejected offers for additional liquidity that would have prevented them from filing for bankruptcy.
However, the judge overseeing the company’s case ruled on Tuesday that the company has access to the loan until next month, when a bankruptcy judge will rule on the petition, reports WWD.
Amoruso started Nasty Gal as an eBay store, but rose quickly to success with her brand of vintage and quirky looks. But the firm has struggled in recent years, with the business experiencing difficulties in keeping pace with its own growth and more recently saw international sales slump.
When announcing the decision to file for Chapter 11 bankruptcy, Nasty Gal chief executive officer Sheree Waterson remained positive about the future of the company.
“Our decision to initiate a court-supervised restructuring will enable us to address our immediate liquidity issues, restructure our balance sheet and correct structural issues including reducing our high occupancy costs and restoring compliance with our debt covenants,” she said in a statement. “We expect to maintain our high level of customer service and emerge stronger and even better able to deliver the product and experience that our customers expect and that we take pride in bringing to market.”
A final hearing on the loan matter is scheduled for 6 December (16).