On May 4, 2016 Aéropostale,
Inc. took the next steps in its ongoing business transformation by filing
voluntary petitions under Chapter 11 of the
U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern
District of New York. 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.
The Company intends to emerge from the Chapter 11 process
within the next six months as a standalone enterprise with a smaller store base,
increased operating efficiencies and reduced SG&A expenses. The Company is
also continuing its previously announced sale process to confirm that it is
maximizing the value of its assets and achieving the best possible outcome for
stakeholders. Any potential sale would be expected to be completed within the
next six months.
As part of this effort to position the Company for long-term
success, Aéropostale is reviewing its leases and other contracts to ensure they
are competitive with current market dynamics. The Company today announced an
initial store closure list of 113 U.S. locations, as well as all 41 stores in
Canada. Store closing sales are scheduled to begin in the United States during
the weekend of May 7-8, 2016, and in Canada during the week of May 9,
2016.
In conjunction with the Chapter 11 filings, Aéropostale
secured a commitment for $160 million in debtor-in-possession ("DIP") financing
provided by Crystal Financial LLC, which, combined with operating cash flow,
will allow Aéropostale to meet its go-forward financial commitments.
The Company has also filed a series of motions that, pending
Court approval, will allow it to pay employee wages and benefits without
interruption, honor all gift cards in full, uphold the terms of its
international licensing agreements, and pay suppliers in the normal course of
business. These motions are typical in the Chapter 11 process and are generally
heard in the first days of the case. The Company separately expects to use
provisions in the Bankruptcy Code that require suppliers to meet the terms of
their pre-existing contracts.
Additional information can be found at
www.ARORestructuring.com. Suppliers and landlords may call our support center +1
(917) 877-5966 or toll-free at +1 (855) 360-2999. They also may email
suppliers@aeropostale.com or landlords@aeropostale.com.
Aéropostale is advised in this transaction by Weil, Gotshal
& Manges LLP, Stifel Financial Corp. and FTI Consulting.
