(Reuters) - Toronto-based retail operator YM Inc is preparing to submit an offer for the intellectual property of The Wet Seal LLC, as the 55-year-old U.S. teen retailer grapples with its second bankruptcy in the past two years, according to a person familiar with the matter.
YM, which owns Canadian chains Stitches, Sirens and Suzy Shier, plans to submit a stalking-horse bid for Wet Seal's intellectual property, the person said on Tuesday, asking not to be identified because the deliberations are confidential. A stalking horse bid sets the minimum price for other possible offers.
Bids for Wet Seal are due later on Tuesday, according to the website for Hilco Streambank, which was hired to sell Wet Seal's intellectual property.
A spokeswoman for YM did not immediately return a request for comment. Versa Capital Management, the private equity owner of Wet Seal, declined to comment.
Wet Seal filed for bankruptcy in February with liabilities between $50 million and $100 million after it failed to find financing to continue as a going concern. It sought court protection without a buyer in hand, and said it planned to sell all of its assets.
Other U.S. specialty retail chains, including The Limited, American Apparel and Aeropostale, have also filed for bankruptcy in recent months, as fast-fashion competitors including Zara and H&M attract their young female customer base.
Wet Seal has been holding going-out-of-business sales at its approximately 142 shops, according to bankruptcy court papers.
For much of the 1990s, Wet Seal enjoyed growth through the acquisition of chain Contempo Casuals and the launch of line Arden B. But it then fell victim to the rise of fast-fashion, causing it to file for its first bankruptcy in 2015. Versa subsequently acquired Wet Seal out of its first bankruptcy.
YM has already been active in the United States. An affiliate of YM bought the parent company of women's chains Mandee and Annie Sez out of bankruptcy about four years ago, an acquisition that also saved their store locations.
Wet Seal shoppers on Tuesday were lamenting the closure of the teen retailer's shops and website with postings on Twitter Inc (TWTR.N).
Twitter user @tayfowlz tweeted "My heart is broken gbye wet seal." Wet Seal's website featured the message "Thanks babe, it's been real."
Reporting by Jessica DiNapoli in New York; Editing by Bernard Orr