Aéropostale Escapes Bankruptcy Liquidation

by San Antonio Attorney

Authentic Brands Group, liquidators and landlords have reportedly won in the bankruptcy auction of Aéropostale, with a bid of $243.3 million in a pact that saves a portion of the business.

The outcomes of an auction that concluded on Sept. 1 imply that Aéropostale will continue to exist after the bankruptcy proceeding, though the number of stores will be much smaller.

Aéropostale released an official statement that said it would exit bankruptcy with a new owner.  The U.S. teen apparel retailer filed for Chapter 11 bankruptcy in May, blaming tight competition in the teen clothing market.

A joint venture was formed by General Growth Properties, Simon Property Group and other entities as the expansive store chain appeared to be heading into liquidation.

Liquidators Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC are also part of the joint venture pact that would allow the operations of 229 stores to continue.  The business enterprise partners will sell off stocks in stores that are lined up to be closed down.

The joint venture was up against Sycamore Partners, an investment firm that went into the bidding battle with a big lead.

Sycamore owns one of the secured lenders to Aéropostale and succeeded at a court battle that permitted it to utilize the $151 million debt of the retailer as money at the bankruptcy auction.  Other contenders had to bid using cash money, a stumbling block that caused interested parties that were prepared to keep the stores open to walk away.

Sycamore said it was satisfied with the outcome of the auction, which will pay back its debt while saving jobs and 229 stores.

Sycamore remained in the bidding war until the night of Sept.  1.  It opposed the management of Aéropostale and expressed uncertainty about the retailer’s ability to keep afloat.

If the bid of the joint venture falls through, Sycamore will be affirmed as the winner.

Results of the auction will be presented to a bankruptcy judge on Sept. 12, for a decision on whether the chain’s preference of a winner satisfies the test of being the top bidder and the best option for the creditors of the company.

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