Aeropostale faces liquidation threat

Image: Mike Mozart / CC BY 2.0

Aeropostale's fate is in limbo as its largest creditor pushes for liquidation in what could be the final chapter for the chain.

The fight between the teen retailer and Sycamore Partners helped push the company into bankruptcy, contends management. Now, that court will soon determine whether Aeropostale will be able to move forward as a retailer or be forced to liquidate.

Aeropostale had scheduled an auction for assets and was in talks with Versa Capital as the preferred bidder with the goal to remain a going concern.

Versa wants to keep Aeropostale operating as a retailer with stores.

Sycamore wants to liquidate everything to pay off debts and could get its wish if the court allows it to use a credit bid at auction. This would let Sycamore use the dollar value of current claims against the retailer to be applied toward its bid for assets.

This would give Sycamore an advantage over other bidders and take Aeropostale closer to liquidation.

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