Aéropostale Files for Chapter 11 Bankruptcy

Aéropostale Files for Chapter 11 Bankruptcy

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.

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 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