Aeropostale Receives Last-Minute Offer to Buy 229 Stores

by San Antonio Attorney

Aeropostale, a U.S.  retailer for teen clothes, sought for bankruptcy protection on May 4, 2016 and its fate has been uncertain since then.  Its assets are up for sale this week, and the company reports that an offer has been received that would allow some of its stores to remain open.

A joint venture would be taken on by General Growth Properties and Simon Property Group, which are real estate trusts and well-known mall operators.  Their bid would potentially keep Aeropostale from shutting down as a “going concern,” which means that around 229 stores and probably more will survive the change in ownership.

Sycamore Partners, the lender which the clothing retailer accuses of using its power to stop credit lines with one of the company’s suppliers and drive it into bankruptcy, can use Aeropostale’s debt as means to place a bid in the auction.  Aeropostale battled this in court, but it lost and the lender has been allowed to participate in the auction.  The judge told Aeropostale that it has to accept the biggest offer.

That case of Aeropostale is similar to the post-bankruptcy agreement of RadioShacks and its lender Standard General that kept the company around.  The lender used the debt of Radioshack as currency despite creditor objections, allowing some of the stores to remain open.

If ever the going-concern agreement fails, liquidators Hilco and Gordon Brothers, together with Authentic Brands Group, will acquire the fixtures and inventory, conducting liquidation sales in the usual method.

When Aeropostale filed for bankruptcy, it had around 800 stores located in North America.

The consortium offered $243.3 million to keep 229 stores open should the clothing retailer be liquidated.

The unexpected last-minute bid is Aeropostale’s final chance to avoid closing down, though it would become a much smaller retailer.

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