Wednesday, June 15, 2016

U.S. Bankruptcy Court Approves 154 Aeropostale Store Closings

()  The U.S. Bankruptcy Court granted a final order approving Aeropostale’s motion for store closing sales and the assumption of liquidation consulting agreements.
As previously reported, “The key component of the Debtors’ restructuring strategy is to right-size their operations by closing unprofitable stores. Such closures will help stem the Debtors’ significant cash burn, increase the Debtors’ liquidity, and allow the Debtors to focus their reorganization efforts around a smaller footprint of more profitable stores. The Debtors and their advisors have identified 154 stores that require prompt closure (the ‘Closing Stores’).”

Court-filed documents continue, “The Closing Stores include 113 of the Debtors’ approximately 770 stores operating in the United States and all 41 of the Debtors’ stores operating in Canada. In formulating the list of Closing Stores, the Debtors considered, among other factors, historical store profitability, recent sales trends, the geographic market in which the store is located, the potential to realize negotiated rent reductions with applicable landlords, and specific circumstances related to a store’s performance.”
In addition, “The Debtors are seeking interim approval to apply the Store Closing Procedures to the Closing Stores given the significant operating losses continuing in the Closing Stores in the aggregate, the Debtors’ liquidity constraints, and the budget set forth in the Debtors’ proposed postpetition financing facility. To run a seamless and efficient large-scale store closing process and to maximize the value of the assets being sold, the Debtors require and are also seeking authority to assume their liquidation consulting agreements (the ‘Liquidation Consulting Agreements’) with Tiger Capital Group and Great American Group (the ‘Liquidation Consultant’), liquidation consulting firms that the Debtors have determined in their business judgment are capable of performing the required tasks and have proposed favorable terms.”

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