- Chain borrowed $150 million from private equity firm in 2014
- Judge rejects claims Sycamore plotted to bankrupt company
Aeropostale Inc. opened a bankruptcy auction Monday with senior lender Sycamore Partners joining the bidding, days after the teen-clothing chain lost a court fight to keep the private equity firm away from the table.
The retailer borrowed about $150 million from affiliates of Sycamore in 2014 as it tried to reorganize. Two years later, the company filed for bankruptcy in Manhattan, claiming Sycamore was partly to blame for its downfall.
On Aug. 26, U.S. Bankruptcy Judge Sean Lane rejected Aeropostale’s attempt to disqualify Sycamore from bidding with its debt instead of cash. The judge shot down the claim that Sycamore plotted in 2013 to push the retailer into bankruptcy and buy it “on the cheap,” calling such an allegation “not credible.”
“The court is mindful of the high stakes in this case for Aeropostale,” Lane wrote, before saying he was “duty bound to apply the applicable law to the facts of the case.”
New York-based Aeropostale filed for bankruptcy in May. In July, the company said it wouldn’t be able to reorganize and instead would sell itself at auction.
“Sycamore looks forward to participating in a fair and robust auction that maximizes the value of the Aeropostale’s assets for the benefit of all of its creditors,” the private equity firm said Monday through a spokesman.
Ray C. Schrock, a bankruptcy lawyer for Aeropostale, didn’t immediately return an e-mail
requesting comment on the auction.
The case is In re Aeropostale Inc., 16-11275, U.S. Bankruptcy Court, Southern District of New York (Manhattan).