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Clothing retailer's business bankruptcy takes an awkward turn

A previous post here from a few months back touched on clothing retailer Aeropostale's Chapter 11 bankruptcy filing. At that time, the business had hoped to keep some of the company's stores open throughout the bankruptcy process, and exit in a stronger position to maintain profitability. However, recent reports indicate that this may no longer be an attainable goal.

The reports indicate that one of the retail company's creditors, Sycamore Partners, had loaned the company $150 million in 2014. As the Chapter 11 bankruptcy case progressed, it seems that it became clear that a successful exit from the bankruptcy process was not going to happen. As a result, assets were set to be auctioned off.

However, in the auction that is scheduled to take place, the U.S. Bankruptcy Court has ruled that Sycamore Partners will be able to make a bid based on the amount of debt owed - $150 million. That complicates the Aeropostale's hope to keep some stores open, as their preferred bidder will not be able to do the same. If Sycamore Partners is successful, it appears that Aeropostale will be liquidated and all of the companies stores - and the jobs those stores provide - will be shut down.

Chapter 11 bankruptcy filings can become quite complex. Any company in Escondido that is contemplating the advantages and disadvantages of a business bankruptcy will want to make sure that they have the most accurate information about their own unique financial circumstances. Going into the bankruptcy process without the right plan can end badly.

Source: Forbes, "AĆ©ropostale Facing Liquidation After Bankruptcy Court Ruling," Laura Heller, Aug. 29, 2016

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