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Aeropostale Inc., the bankrupt teen clothing chain, says a group including mall operators General Growth Properties Inc. and Simon Property Group Inc. has bid for “substantially all†its assets with an eye toward keeping at least 229 stores open.
The so-called going concern bid would also cover expenses including Aeropostale’s bankruptcy financing, the company said in a filing in Manhattan federal court. The amount of the bid wasn’t disclosed.
Lawyers for Aeropostale updated the bankruptcy judge on the auction Wednesday afternoon, saying they were working on documentation for the group’s offer, while also evaluating other bids. The auction should conclude Thursday, attorney Ray Schrock told U.S. Bankruptcy Judge Sean Lane on a conference call. He said the parties worked through the night.
“We have an energized but weary group,†Schrock said.
New York-based Aeropostale filed for Chapter 11 protection in May, joining other mall-based retailers that have struggled to compete with big-box chains, online merchants and “fast fashion†rivals.
The company, which had about 800 locations in the U.S. and Canada before filing Chapter 11, accused lead lender Sycamore Partners of using a supplier it controlled to steer the chain into bankruptcy and buy it on the cheap. Last week, Lane shot down that contention and said Sycamore could take part in the auction, bidding with about $150 million in debt it is owed in lieu of putting up cash.
A lawyer for Sycamore said Wednesday that the private equity firm hasn’t yet decided whether it will support the going concern bid, or whether it will pursue an offer of its own. It needs to figure out how the mall group’s bid will affect its recoveries before deciding what to do, the lawyer said.
The going concern bid comes with a backup plan: If it isn’t chosen as the “best and highest†offer, Hilco Merchant Resources LLC, Gordon Brothers Retail Partners LLC, both liquidators, and Authentic Brands Group, a licensing firm, will bid on the chain’s merchandise and intellectual property. All three are members of the bidding group that includes Simon and General Growth.
Aeropostale plans to proceed with going-out-of-business sales at stores that will be shuttered. To make the most of the sales, the retailer wants to start Labor Day weekend, Schrock said. Lane said the company can come back to court Thursday for permission to begin the sales.