Aéropostale, Sycamore Partners Battle Over Bankruptcy
The planned auction of teen retailer Aéropostale has been moved back to August 29 as a bankruptcy judge weighs what could be a company-ending decision. Aéropostale and Sycamore Partners, the private equity firm that was at one time one of the retailer's largest backers, don’t agree on its future. Sycamore is pushing for liquidation, while Aéropostale hopes to save itself (and the 10,000 people who work for it). Aéropostale blames Sycamore for allegedly using its control over a big supplier and big lender to back it into a corner, forcing the bankruptcy. Sycamore denies the accusations and is battling for the right to bid its loans, $150 million, as currency at a bankruptcy auction, in a so-called “credit bid."
Total Retail’s Take: This fight followed Aéropostale into chapter 11 bankruptcy protection back in May, and the retailer doesn’t want its fate in Sycamore’s hands. Sycamore will be able to bid with debt rather than cash, and experts says that potential buyers won’t step up to compete with that. This would result in a win for Sycamore and the end for Aéropostale.
