Bankruptcy Judge Approves Sale Of Aeropostale That Could Keep 229 Stores Open

Image courtesy of JeepersMedia

It looks like the bid Aeropostale received at the end of August that could end up saving at least 229 stores and 7,000 or so jobs is one step closer to the real thing for the struggling teen retailer, after a bankruptcy judge gave the offer his approval.

A group including landlords Simon Property Group and General Growth partners, liquidators, Hilco Merchant Resources and Gordon Brothers Retail Partners, and the licensing company Authentic Brands Group all made the offer together, The Wall Street Journal reports. It’s worth $243.3 million.

Though Aeropostale’s attorney said the decision has the potential to save more than 7,000 of the retailer’s 10,000 positions, talks are still going on with the new owners: the number of jobs and stores that live on after this could grow. The group of liquidators will oversee the closures of those stores that do have to shut down. At the start of bankruptcy, Aeropostale had 800 or so stores in the U.S.

Sycamore Partners, the lender that Aeropostale accused of using its control over one of the chain’s suppliers to cut off credit lines and push it into bankruptcy, could have used its debt as a currency at the bankruptcy auction, which many at Aeropostale worried would have been hard to trump with an all-cash bid.

Things worked out, however, for the winning bidders.

“This is an extraordinary result in a challenging case, especially after where we found ourselves after the Aug. 29 ruling,” creditors’ committee attorney Brad Sandler said on Monday, referring to the judge’s decision to let Sycamore use that debt if it wanted to.

Sycamore Partners did end up bidding, making an offer that would’ve kept some stores open, but it was ultimately outbid. This proves Sycamore wasn’t the bad guy, the private equity firm’s lawyer says.

“As it turned out, my client wasn’t in this to kill the company and all of its jobs,” said Sycamore attorney James Stempel. “I think the term loan lender proved at the auction that it saw value in keeping stores open.”

Aéropostale Sale Wins Court Approval [The Wall Street Journal]