Bankrupt retailer Aeropostale has been granted a reprieve in the form of a $160 million loan to meet financial commitments and navigate a turnaround.
The U.S. Bankruptcy Court has given final approval for Aeropostale to access $160 million in debtor in-possession, or DIP, financing from Crystal Financial.
This financing, combined with Aeropostale's operating cash flow, will allow the company to meet its financial commitments and allow Aeropostale to focus on its restructuring process, confirming a plan of reorganization and emergence from Chapter 11 during the third quarter of 2016, according to a company statement.
Aeropostale filed for Chapter 11 in early May and set a timeline to emerge in six months. More than 150 stores are scheduled to close, including all locations in Canada.
"We are pleased that the court has approved our DIP financing," said CEO Julian Geiger. "We are looking forward to emerging from this process as a leaner, more efficient business and firmly believe that we will be well-positioned to compete and succeed in today's retail environment."
Teen-oriented retailers are struggling in general as fast fashion, low-margin goods drive the industry. Fellow merchants Abercrombie & Fitch, American Eagle Outfitters, American Apparel and Gap brands are all seeking relevancy in today's environment. Even luxury labels and department stores such as Saks Fifth Avenue and Ralph Lauren are reworking supply chains and timelines to source goods more quickly and cheaply.
- see this Aeropostale press release