Aé ropostale Files for Bankruptcy Protection
04 Maggio 2016 - 4:10PM
Dow Jones News
Troubled teen retailer Aé ropostale, Inc. filed for chapter 11
bankruptcy protection Wednesday, with plans to trim its chain,
rework contracts and emerge in streamlined form.
Aé ropostale is following a path laid out by other mall-based
specialty retailers plunged into trouble due to changing consumer
tastes and competition from newer fast-fashion chains, but with a
difference.
The retailer is taking on the private-equity firm that controls
its largest secured creditor and one of its largest suppliers,
Sycamore Partners, in an open-court fight. Aé ropostale and
Sycamore have been feuding for some time. Wednesday, lawyers for Aé
ropostale said in court filings that they suspect Sycamore engaged
in moves designed to drive Aé ropostale into bankruptcy and force
it to liquidate.
Aé ropostale has lined up bankruptcy financing, and court papers
reflect no plans for a liquidation, even though 154 stores are
slated for closure. Trimming the chain of about 800 stores is part
of Aeropostale's plan to emerge from bankruptcy in six months as a
reorganized, smaller chain. In court papers, Aé ropostale Chief
Financial Officer David Dick said the company is intent on saving
as many jobs as it can. Some 14,500 people are employed at Aé
ropostale.
Alongside the restructuring effort, Aé ropostale will be looking
for potential buyers, Mr. Dick said.
The turnaround strategy also calls for resolving its troubles
with Sycamore, starting with a court-assisted investigation.
"It appears that the Sycamore Parties may have engaged in a
long-standing plan to put the Company into bankruptcy for their own
purposes. The Debtors therefore have an obligation to other
creditors to investigate and assess potential claims against the
Sycamore Parties," Aé ropostale lawyers wrote in a court
filing.
Sycamore couldn't immediately be reached for comment
Wednesday.
Business behavior such as demanding faster payment can be called
into question once a company is in bankruptcy, on the grounds, for
example, that a supplier with special leverage took advantage of
its position, to the detriment of other creditors.
Until just months ago, Sycamore was also a big Aé ropostale
shareholder, with two members on the company's board. That
connection could give rise to claims that the private-equity firm
was an Aé ropostale insider, and thus, had duties to look out for
the company instead of itself on crucial issues.
In court papers, Aé ropostale's lawyers say they want to look
into whether Sycamore interfered with the retailer's attempt to get
new terms from another big creditor. Additionally, the company's
lawyers say a Sycamore-controlled company "may have used its
position as a significant supplier of merchandise" to push Aé
ropostale to breach covenants on a loan from another
Sycamore-controlled company.
Aé ropostale's debts include $223 million in secured loans,
including $73 million owed to a syndicate of lenders, and $150
million owed to lenders led by Sycamore affiliate Aero Investors
LLC, court papers say.
Store lease costs top an estimated $200 million annually. Aé
ropostale estimates it owed suppliers about $23 million as of
Wednesday.
The fight with Sycamore aside, Aé ropostale is joining a line of
similar retailers in bankruptcy that includes Pacific Sunwear of
California Inc., known as PacSun; women's formalwear retailer Cache
Inc.; teen-focused Wet Seal and surfwear seller Quiksilver Inc.
Matt Jarzemsky contributed to this article.
Write to Peg Brickley at peg.brickley@wsj.com and Joanne Chiu at
joanne.chiu@wsj.com
(END) Dow Jones Newswires
May 04, 2016 09:55 ET (13:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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