Aéropostale, the latest of several teen retailers that filed for Chapter 11 bankruptcy protection in May, is unlikely to reorganize after all. The retailer determined that “reorganization on a standalone basis is not feasible,” according to a court filing reported by Bloomberg.
Instead, Aéropostale will opt to sell its assets to a new buyer. The retailer’s goal is to find a lead bidder by Aug. 15. If there’s a sign that any other parties are interested, Aéropostale will hold an auction for its assets on Aug. 22, 2016.
Aéropostale wouldn’t be the first big-name retailer this year that filed for bankruptcy with initial plans for reorganization. Sports Authority underwent a similar journey, finally opting to liquidate its assets after failing to reach an agreement with creditors regarding debt.
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At this point, finding a buyer would likely be the only way the teen retailer could continue in its present state, as the retailer’s financial results are fairly dire. In the May Chapter 11 filing, Aéropostale revealed it had $390 million in debt and approximately $354 million in assets.
Former lender Sycamore Partners won’t be bailing the retailer out of its funk. Sycamore initially loaned Aéropostale $150 million in 2014, but the retailer has since been in an ongoing dispute with the venture capital firm, alleging that its partner, clothing supplier MGF Sourcing, disrupted the supply of merchandise and imposed stricter payment terms.
Aéropostale is reviewing 11,000 pages of documents and depositions of key individuals that Sycamore Partners produced during a bankruptcy probe, and is evaluating whether to pursue claims against the private equity firm.
