Wednesday, August 17, 2016

BLOOMBERG: Aeropostale’s Sycamore Rift Goes to Trial as Vote Proceeds

Aeropostale’s Sycamore Rift Goes to Trial

Aeropostale CEO  Julian Geiger claims the private equity firm backing the distressed teen retailer wanted it to crumble
The retailer has asked ( Judge) Lane to disqualify New York-based private equity firm Sycamore Partners from using its $150 million debt to bid at the auction. A trial on Aeropostale’s complaint began Aug. 15 in the SDNY Bankruptcy Court.

Julian Geiger former CEO of Aeropostale on witness stand questioned by Sycamore partners attorney Robert Ellis
 The proposed reorganization accounts for the different ways Sycamore’s claims will be treated based on how the litigation plays out. But the plan gives no estimate of what some creditor groups would recover because Aeropostale has yet to find a so-called stalking horse to make the starting bid for its assets. Lane questioned how creditors can vote when there is no “floor” for the sale.

Richard Slack of Weil Gotshal questioning Julian Geiger on the stand. Weil represents Aeropostale in the bankruptcy proceeding.

Aeropostale has said since the outset of its bankruptcy in May that Sycamore used a supplier it controls, MGF Sourcing Holdings Ltd., to drive the company into Chapter 11. On July 22, the retailer accused Sycamore of pursuing a “loan to own” strategy and said the firm and its managing partner Stefan Kaluzny traded on inside information about the company.

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