Aeropostale Inc (OTCMKTS:AROPQ) shares were down 42.86% to $0.0360 on Monday and an additional 2.78% in after-hours trading. The company has a market cap of $2.90 million at 80.64 million shares outstanding. Share prices have been trading in a 52-week range of $0.02 to $0.19.
Aeropostale Inc is a specialty retailer of casual apparel and accessories, principally serving young women and men through its Aeropostale stores and its website. It operates in two segments: retail stores and e-commerce, and international licensing. The company provides customers with a focused selection of fashion and fashion basic merchandise through its retail stores and e-commerce channel. Aeropostale maintains control over its brands by designing, sourcing, marketing and selling all of its own merchandise, other than in licensed stores outside the United States.
Aeropostale Inc filed for bankruptcy in May before later on stating that it won’t be able to reorganize. Instead, the company opened a bankruptcy auction in July and will pass on the proceeds to creditors. The company has attempted to disqualify Sycamore Partners from the auction, citing that the senior lender used a supplier it controlled to trigger the bankruptcy filing.
However, U.S. Bankruptcy Judge Sean Lane rejected the company’s claim that Sycamore plotted this since 2013, calling the allegation “not credible.”
The court is mindful of the high stakes in this case for Aeropostale,” said Lane.
He added that he was bound by duty to apply the appropriate law to the facts of the case. Meanwhile, Sycamore Partners mentioned that it is looking forward to participating in a fair auction that maximizes the value of Aeropostale Inc for the benefit of its creditors.
The clothing retailer borrowed $150 million from affiliates of Sycamore in 2014 in its attempt to reorganize, but it later on blamed the lender for its downfall in filing for bankruptcy. The company listed $390 million in debt and about $354 million in assets in its Chapter 11 filing.
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