As Tennessee businessmen may know, a company may have to go into bankruptcy if it sees continuing losses and mounting debts. This is what happened with Aeropostale, a clothing company based in New York City that markets apparel for teenagers and young adults. The company, which will be closing a total of 154 stores, has lost money for the past 13 quarters. When it filed for Chapter 11 bankruptcy protection, it listed in its petition debts of $390 million and assets of $354 million. The New York Stock Exchange announced in April that the company would be delisted.
The company is seeking buyers, and a representative stated that the company needed to negotiate or get rid of certain contracts as well as take care of a dispute with a former investor before it can come out of bankruptcy. Reportedly, competition from other clothing companies that offer lower prices and faster changes in fashion to keep up with trends has damaged older companies such as Aeropostale and American Eagle.
In total, the company has 739 Aeropostale stores in Puerto Rico and United States, 41 in Canada plus 25 affiliated outlets. In addition, it provides brand licensing to hundreds of foreign stores. Despite large discounts offered by Aeropostale to its customers, sales still saw a 16 percent drop during the most recent fiscal quarter.
In a Chapter 11 petition, a company will ask the court to allow it to reorganize and restructure its obligations in an attempt to pay creditors back and regain financial stability. An attorney experienced in Chapter 11 filings can be of assistance in preparing a proposed plan and presenting it to the court and the company’s creditors in order to obtain approval.
