Private equity firm Versa Capital Management LLC beat out debtor-in-possession lender B. Riley & Co. to buy bankrupt Wet Seal.

"Versa Capital is pleased to have prevailed in our effort to acquire Wet Seal's business," CEO Gregory Segall said.

Versa, headquartered in Philadelphia, has invested in several other retail businesses, including Sport Chalet, Avenue, Eastern Mountain Sports and Bob's Stores. Mergers & Acquisitions reported the firm was raising a fund in February. 

Wet Seal filed a motion on March 13 with the U.S. Bankruptcy Court for the District of Delaware in Wilmington for a replacement $20 million DIP from Mador Lending LLC, an affiliate of Versa. Wet Seal says it needs the court to approve the new financing because Versa's auction success could cause its B. Riley loan to mature soon – five days after B. Riley's plan sponsorship agreement is terminated, according to court papers.

A hearing on the DIP is scheduled for March 18.

When Wet Seal filed for bankruptcy on Jan. 16, it filed a DIP motion under which B. Riley, a Los Angeles investment firm, would provide the DIP loan to get the retailer through its bankruptcy case, and in the end, give B. Riley an 80 percent stake in the business. For more on that deal, see Finance Finesse: DIP Loans May Rescue Struggling Retailers. For more on Wet Seal's bankruptcy, see Wet Seal Joins March of Clothing Retailers Filing Bankruptcy. 

The company is one of many retailers to end up in bankruptcy protection as consumer shopping habits shift away from malls.