Aeropostale files Chapter 11

Aeropostale joins the growing list of retailers that have filed for Chapter 11 bankruptcy protection.

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, according to a statement.

Aeropostale has been feuding with Sycamore Partners, a key investor, for interfering with shipments and lines of credit. The retailer reportedly began exploring options to reorganize earlier this year.

Management intends to emerge from Chapter 11 within the next six months as a standalone enterprise, albeit a smaller one. A list of initial store closures includes 113 U.S. locations and all 41 stores in Canada.

Closings will commence May 7.

"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. 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," said CEO Julian Geiger. "We appreciate the loyalty and support of our customers, employees and business partners as we complete this process."

Aeropostale has secured $160 million debtor-in-possession financing from Crystal Financial.

For more:
- see this Bloomberg story
- see this Aeropostale statement