Aeropostale is Being Pressured to Liquidate Assets by Creditors

Since the company filed bankruptcy this May, Aéropostale has been trying to come up with a reorganization plan, but unfortunately one of the company’s creditors, Sycamore Partners, is pushing to liquidate the company’s assets. Sycamore claims Aéropostale has been wasting millions of dollars on trying to get an interested buyer and thinks the company is a lost cause.

During last Tuesday’s bankruptcy court hearing, Sycamore claimed liquidation was the preferred plan of action for most of Aéropostale’s creditors. Although, creditor attorney Robert Feinstein stated that the lesser creditors were on board with the continued reorganization plans. He also stated that the company is still talking to the private equity firm Versa Capital Management to buy 500 of their retail stores that are located mostly in U.S malls.

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The dispute between Aéropostale and Sycamore has delayed the company’s auction which was set to take place August 18th but now has been pushed back to August 29th. Sycamore, which owns a major stake in the company, agreed in 2014 to source their materials to MGF (supply chain/clothing manufacturing company). Although Aéropostale claims that their partnership with MGF has dragged the company toward its money problems. Sycamore representatives, on the other hand, believe Aéropostale went bankrupt because of mismanagement within the company.

With the impending auction, Sycamore hopes that if they liquidate the company’s assets, they can pay off their 150-million-dollar loan. The company’s creditor lawyer Feinstein believes Sycamore’s plan to liquidate would deter potential sale offers that could save the company from going under.

Vera Capital Management has helped other retail companies get back on track, like when they invested 10 million dollars on Wet Seal stores all over the country in 2015. With negotiations still underway between Aéropostale and Vera, they hope the firm will save thousands of retail jobs at the company’s stores. Vera has yet to offer a firm bid for the 500 Aéropostale stores.

Fashion commenters assume Aéropostale’s troubles have a lot to do with the company’s reluctance to innovate their brand away from their logo–eccentric clothing that shoppers aren’t willing to buy anymore. Aéropostale stores are barely hanging on to life since most of their merchandise is currently sold a high discount.

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