Aeropostale Chapter 11 Bankruptcy Closes Pennsylvania Stores

The Wall Street Journal, at wsj.com/articles/aeropostale-files-for-bankruptcy-protection-1462339757 , reports that Aeropostale filed for Chapter 11 bankruptcy protection Weds 5/4/2016 against private-equity firm Sycamore Partner, which controls both its largest lender and one of its largest suppliers. In Wednesday's court filings, Aeropostale indicated they suspect Sycamore took actions intended  to force Aeropostale into bankruptcy. A Sycamore spokesman denied "engaging in any such conduct, as it would be counterproductive" to the firm's "significant financial investment" in Aeropostale. Sycamore also has attempted to block Aeropostale's bankruptcy loan with Crystal Financial, and has called Aeropostale a "financial disappointment of epic proportion."


Sycamore, which engages in retail and consumer investments, owns MGF Sourcing, which manufactures clothing for Aeropostale as well as other retailers. MGF earlier this year demanded Aeropostale pay for goods in advance instead of the more typical payment after delivery. In 2014, Aero signed a 10-year supply agreement with MGF under the terms of a $150 million loan deal with Sycamore. As indicated by the Wall Street Journal article author, the eruption of hostilities on the first day of the bankruptcy proceeding "tells me there is likely a very different view of the world between the two." Of Aeropostale's 800 stores 154 are slated for closure. This includes the PA stores Monroeville, Moosic and Chambersburg. The company employs 14,500 people.

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