May 4, 2016
Reading time
2 minutes
Download the article
Click here to print
Text size
aA+ aA-

Aeropostale files for Chapter 11 bankruptcy protection

May 4, 2016

Struggling teen apparel retailer Aeropostale Inc filed for Chapter 11 bankruptcy protection on Wednesday, succumbing to years of losses as shoppers thronged fast fashion retailers and competitors.


The mall-based retailer listed assets in the range of $100 million to $500 million, and liabilities of between $100 million and $500 million, according to a court filing.

Aeropostale said it plans to finance its operations during its bankruptcy through a $160 million loan from Crystal Financial LLC combined with operating cash flow.

The company also announced an initial store closure list of 113 U.S. locations, as well as all 41 stores in Canada.

The difficult market for teen apparel has triggered bankruptcy filings by high-profile retailers such as American Apparel Inc, Quiksilver Inc and Sports Authority Inc over the past year.

The company said in March it was exploring strategic alternatives, including a sale, citing a dispute with a vendor, MGF Sourcing US.

MGF is an affiliate of private-equity firm Sycamore Partners, which had thrown a lifeline of $150 million to the struggling apparel retailer in 2014 and previously owned an 8 percent stake.

Aeropostale expects to emerge out of bankruptcy within six months with a clear resolution of its ongoing disputes with Sycamore Partners, among other things, it said in a statement.

Aeropostale said in April that it would delay filing its annual report for the year ended January 30, 2016 as it explores strategic options.

Several U.S. apparel retailers are also bearing the brunt of customers flocking to online retailers and fast-fashion retailers such as H&M, Forever 21 and Inditex's Zara.

Although Aeropostale continues to struggle with falling sales, its rivals such as American Eagle Outfitters Inc and Abercrombie & Fitch Co have managed to turn around their businesses by controlling inventories and responding faster to changing fashion trends.

Established by R.H. Macy's & Co. in the early 1980s, Aeropostale made its stock market debut in 2002 but the New York Stock Exchange decided to delist the shares in April.

The company operated 739 Aeropostale stores in 50 states and Puerto Rico, 41 in Canada and 25 P.S. from Aeropostale stores in 12 states, as of May 1, 2016.

The case is in U.S. Bankruptcy Court, District of New York, Case No: 16-11275.


© Thomson Reuters 2023 All rights reserved.