Clothing retailer Aéropostale filed voluntary petitions under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York.
The company secured a commitment for $160 million in debtor-in-possession (DIP) financing from Crystal Financial, which, combined with operating cash flow, will allow Aéropostale to meet its financial commitments going forward.
The company expects to use the Chapter 11 process to optimize its store footprint, access additional tools to shed or renegotiate burdensome contracts, resolve its ongoing disputes with Sycamore Partners and achieve long-term financial stability.
The company intends to emerge from the Chapter 11 process within the next six months as a standalone enterprise with a smaller store base and improved operating efficiencies. The company is continuing its previously announced sale process to confirm that it is maximizing the value of its assets and achieving the best possible outcome for stakeholders. Any potential sale would be expected to be completed within the next six months.
The company announced an initial store closure list of 113 U.S. locations and all 41 stores in Canada.
“While initiatives such as the implementation of our two-chain factory and mall strategy and our merchandise repositioning have started to gain traction, the ripple effects of an ongoing dispute with our second-largest supplier put substantial strain on our liquidity while also preventing us from realizing the full benefits of our turnaround plans,” said Julian Geiger, Aéropostale CEO. “As a result, we have chosen to take more decisive and aggressive action to create a leaner, more efficient business that is well-positioned to compete and succeed in today’s retail environment.”