Pacific Sunwear accelerates bankruptcy plans

Struggling surfwear chain Pacific Sunwear of California Inc has accelerated its bankruptcy plans after negotiating with lenders and could file for Chapter 11 protection as soon as Wednesday night, Bloomberg reported.

The retailer has worked out a deal with private equity firm Golden Gate Capital to help the company avoid liquidation, Bloomberg reported, citing people with knowledge of the matter.

Golden Gate had lent PacSun $60 million in 2011.

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Pacific Sunwear did not immediately respond to a request for comment.

The bankruptcy agreement involves swapping debt for equity after PacSun emerges from Chapter 11, the report cited one of the people as saying. PacSun will get financing to continue operations during the restructuring process.

Pacific Sunwear, which has posted annual losses since 2008, had long-term debt of $97 million and cash and cash equivalents of $11.3 million as of October.

A sluggish retail spending environment and increasing competition from fast fashion and online rivals have hurt U.S. clothing retailers, prompting companies such as American Apparel Inc, Quiksilver Inc and Wet Seal Inc to file for bankruptcy.