Pacific Sunwear of California Inc fka PSUNQ

[1manband]

They didn't use all the money from the loan and they were given extra funds for seasonal use.

No, they were not. Not until the bankruptcy filing.

The last 10-Q spelled it out very clearly.

"However, if the Company's comparable store net sales and gross margins continue to decline, and if the Company continues to experience negative operating results, the Company may deplete all of its cash reserves and be required to access most, if not all, of the Wells Credit Facility, and may be restricted from additional borrowings if it fails to comply with the minimum excess availability covenant in the Wells Credit Facility (see Note 7). The Company also could potentially require other sources of financing to fund its operations and to refinance the Term Loan, which sources might not be available on a timely basis, or at all. Should the Company be unable to execute its plans, remain in compliance with the Term Loan or the Wells Credit Facility or obtain additional or alternative financing, it may be unable to repay the Term Loan and continue as a going concern for a reasonable period of time."

Already at the time of the 10-Q they were operating under a temporary waiver from Wells Fargo, because their financial situation was horrible and sales were falling. And what happened between the filing of that 10-Q and the bankruptcy in April? Same store sales continued to decline and they were clearly out of compliance with their covenants in the borrowing agreements. And that in turn means they were unable to draw any additional funds from the Wells Credit Facility or the Golden Gate Term Loan, which means they had no choice but to file bankruptcy. That situation was also disclosed in the 10-Q:

"Pursuant to the terms of the Wells Credit Facility agreement, the Company is required to maintain minimum excess availability of $10 million (“Minimum Availability”) and is also subject to more frequent debt compliance reporting (“Weekly Borrowing Base Delivery Event”) and certain cash control requirements (“Cash Dominion Event”) if its availability under the Wells Credit Facility falls below $35 million and $25 million, respectively. In October 2015, Wells Fargo granted the Company a temporary reduction of the Cash Dominion Event through the end of December 31, 2015 from the $25 million threshold to an amount equal to at least 15% of the Loan Cap, defined as the lesser of the aggregate commitments of $100 million and the borrowing base. The Company is currently in compliance with the Minimum Availability covenant and the Cash Dominion Event requirement and expects to remain in compliance after the additional draw of $35 million in the fourth quarter of 2015. Based on current forecasts, the Company anticipates its available borrowings under the Wells Credit Facility will result in a Weekly Borrowing Base Delivery Event and a Cash Dominion Event in early fiscal 2016 for which the Company may seek to obtain waivers from Wells Fargo and Golden Gate similar to the waivers described above. There can be no assurances that such waivers will be obtained."

They warned everyone right in the 10-Q that bankruptcy was very possible after December 31, 2015. After the temporary waiver ran out and they could not come back into compliance, all sources of funds were cut off. They had to file bankruptcy as they could not have stayed in business otherwise.

they are still in business and will continue to be

Yes, they are. And that is how bankruptcy works. The debt holders and lenders own the assets, and they will continue to operate as they feel it is their best opportunity to maximize their returns. I understand as a common shareholder you feel that is somehow wrong, but it is not. Common shareholders haven't legally been entitled to a penny of PSUN for a very long time due to the shareholders' equity deficit. All assets have been legally the property of the lenders for a very long time - even before the bankruptcy was filed.