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Aéropostale Files for Chapter 11 Bankruptcy

Author: Joel R. Glucksman

Date: June 22, 2016

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Aéropostale files Chapter 11

Clothing retailer Aéropostale recently announced that it had filed for Chapter 11 bankruptcy protection. According to a report in Fortune, the company filed its bankruptcy petition late last month, even as it attempted to find a buyer.

Aéropostale decides to seek bankruptcy protection

Bloomberg reported that the company filed for Chapter 11 bankruptcy protection to lighten its staggering debt load. In the report, Aéropostale will seek to continue operations with a strategic sale to a buyer that assumes its debt liabilities

Aéropostale’s financial struggles lead to insolvency

Aéropostale’s current financial issues have intensified for the last four years as its teen consumer demographic has sought out other clothing retailers. As a result, its sales have fallen from $2.29 billion in 2012 to $1.5 billion last year. Business Insider reported that its sales in March fell 6.7 percent over the same month last year.

Aéropostale’s liquidity issues also arise from a late 2015 dispute with one of its main vendors, MGF Sourcing US, an affiliate of Sycamore Partners, that loaned it $150 million for an 8 percent ownership stake in the company. Due to this dispute, Fortune reported that the company did not receive the loan and is currently hemorrhaging funds without a plan to control future costs.

As a result, the company’s stock price recently fell to 15.1 percent, a record low after a 27.7 percent drop. Fortune reported that this prompted the New York Stock Exchange to halt all trading in the company and de-list it from the exchange after it traded under $1 for an extended period. Aéropostale now has a market value of $30 million, a significant reduction from $3 billion in 2010.

Are you a creditor in a bankruptcy?  Have you been sued by a bankrupt?  If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.

So what does the future hold for Aéropostale? Only time will tell. Otherwise, for more articles on retail companies filing for Bankruptcy, check out:

  • Karmaloop Inc. files for Chapter 7 Bankruptcy Protection
  • American Apparel Files for Chapter 11 Bankruptcy Protection
  • Coldwater Creek, Inc. may file for Bankruptcy

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

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