After losing money for 13 consecutive quarters, the clothing chain Aéropostale filed for Chapter 11 bankruptcy Wednesday and announced its plans to close 154 stores nationwide. Fox News reports: “The New York company said Wednesday that it is closing 113 of its 739 U.S. stores and all 41 locations in Canada. Going-out-of-business sales at those U.S. stores will begin this weekend.”
Aéropostale has lined up bankruptcy financing, and court papers reflect no plans for a liquidation, even though 154 stores are slated for closure. Trimming the chain of about 800 stores is part of Aeropostale’s plan to emerge from bankruptcy in six months as a reorganized, smaller chain. In court papers, Aéropostale Chief Financial Officer David Dick said the company is intent on saving as many jobs as it can. Some 14,500 people are employed at Aéropostale. Alongside the restructuring effort, Aéropostale will be looking for potential buyers, Mr. Dick said. The turnaround strategy also calls for resolving its troubles with Sycamore, starting with a court-assisted investigation.“It appears that the Sycamore Parties may have engaged in a long-standing plan to put the Company into bankruptcy for their own purposes. The debtors therefore have an obligation to other creditors to investigate and assess potential claims against the Sycamore Parties,” Aéropostale lawyers wrote in a court filing. Sycamore Parties refers to the firm, some of its leaders and lending affiliate Aero Investors LLC. Sycamore, through a spokesman, denied acting improperly and said Aéropostale’s poor financial performance led to its bankruptcy.
Let’s face it. The economy is not thriving. Retail giants are closing at a massive rate. Macy’s, Walmart, Sears etc…And it doesn’t seem to be bouncing back anytime soon. I am not sure what will drive the economy, but we are in for a potential free fall if things don’t turn around soon.