Aeropostale accuses Sycamore Partners of '' loan to own ' plan

© Reuters. A customer enters the Aeropostale store in Broomfield

By Jessica DiNapoli (Reuters) – Bankrupt U.S. teen merchant Aeropostale (PK:-RRB- submitted a movement against its lender, private equity company Sycamore Partners, in bankruptcy court late on Friday, implicating it of outlining a “loan to own” scheme to push the chain into bankruptcy. Aeropostale asked a U.S. bankruptcy court judge to bar Sycamore from utilizing the $150 million it is owed as credit to bid on the business, which is up for sale in a court-supervised auction. Aeropostale also desires the judge to reduce just how much Sycamore would be paid back on its loan. “These insurance claims lack benefit and consist of various allegations that are absolutely nothing more than reckless fabrications,” a Sycamore Partners spokesperson stated in a declaration on Saturday. “This is another in a series of desperate efforts by Aeropostale to attempt to move the blame for its disastrous financial efficiency and the mismanagement of the company by its officers and directors.” A spokeswoman for Aeropostale said that the business continues to believe that Sycamore “took part in significant bad acts.”” [Sycamore] will unjustly benefit from () misdeeds at the cost of” Aeropostale and its other lenders if a judge permits the company to use the $150 million to bid in the auction, Aeropostale stated in the court filing. Aeropostale says in the filing that Sycamore, through its garments sourcing company, MGF Sourcing, imposed “difficult” payment terms on the retailer in effort to injure its money position, causing defaults under other credit agreements resulting in bankruptcy. Aeropostale needed to make merchandise purchases through MGF as a condition of the loan Sycamore affiliates made to the seller. The merchant likewise asserts that Sycamore traded public Aeropostale shares while it had nonpublic details on the business. A minimum of 5 U.S. teenager retailers, including Wet Seal LLC and Pacific Sunwear of California Inc, have declared bankruptcy in the past 2 years, as the spending routines of young people shift and they check out shopping malls less frequently. Those bankruptcies have not included the ruthless fight between lender and customer that Aeropostale’s has. There will be a hearing on Aeropostale’s claims against Sycamore in August, the Aeropostale spokeswoman stated. Aeropostale’s insurance claims versus Sycamore conclude weeks of an examination by the business into the private equity firm. Sycamore concentrates on retail and customer financial investments. The firm prepares to pursue personal claims against Aeropostale’s officers and directors for “fraudulently concealing” a breach of a liquidity covenant, self-dealing and not supporting fiduciary duties, the Sycamore spokesman stated. Disclaimer: Fusion Media want to remind you that the data contained in this website is not always real-time nor precise. All CFDs (stocks, indexes, futures) and Forex rates are not supplied by exchanges however rather by market makers, therefore costs might not be precise and may differ from the real market value, meaning costs are indicative and not appropriate for trading purposes. Therefore Combination Media does n`t bear any obligation for any trading losses you may sustain as a result of utilizing this information. Combination Media or anybody involved with Blend Media will decline any liability for loss or damage as an outcome of dependence on the details consisting of data, quotes, charts and buy/sell signals contained within this site. Please be fully informed relating to the dangers and expenses connected with trading the monetary markets, it is one of the riskiest financial investment kinds possible.

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