Aeropostale Files for Chapter 11 Bankruptcy

Aeropostale followed more mall stalwarts of the 90’s and 00’s into bankruptcy court, seeking a reorganization. Such once must-have brands such as Wet SealDelia’s, American Apparel, and Pacific Sunwear have sought reorganizations as teen shoppers forsake the mall experience for online shopping, fast fashion along the lines of H&M, and hunt for deals to stretch their clothing dollars farther. As location retail seems to be hollowing out from the squeeze on the middle class and from avid deal-hunting on the internet, malls and mall brands are taking a hit.  The phenomenon has even led to a real estate term called “dead mall syndrome.” The once-popular shopping areas that shaped teen culture from the 1970’s through the early 2000’s are losing tenants and anchor stores, becoming destinations only for UrbExers in search of content for their YouTube channels.

The economy did not improve for the middle class and working poor in this recovery, where the gains have largely gone to the people who already had wealth to cushion them through the Recession. Tighter budgets going forward are a harsh reality to the retail industry, as is a new generation that is less concerned with mall culture than finding a deal. Retailers who can’t make the jump to fast fashion, online sales, artisan appeal, or ‘aspirational’ branding are facing the future with uncertainty. The great shakeout of the recession is not over, but ongoing as the face of American retail moves from mall to pixels for reasons of convenience and price.

Reorganization is not a sure bet. A Chapter 11 bankruptcy for a corporation can end up being converted to Chapter 7 liquidation if there is not a reasonable plan going forward. Sports Authority is just the latest store to find this out, pushing back against liquidation rumors as it seeks a buyer ahead of a deadline. Some brands will find revival online, but others will fade into obscurity. As tough a decision as it is, there are times for companies and individuals to consider filing for bankruptcy. It’s not a lightly made decision, but when your debts are overwhelming, then it’s time to consider the possibility. Let’s face it, the newest Powerball jackpot is not going to land in your pocket – and consider the tax bill if it did.

As an individual or small business filing for bankruptcy, you can even find a measure of relief in the automatic stay that stops collections practices. For instance, if you were Aeropostale, you would be able to shed expensive leases, stop your creditors from collections actions such as by a collection agency or lawsuits, and still tap enough credit to wind down or revamp your business. Call Van Horn Law Group and set up a free consultation, and we can see what’s best for you going forward. You might not even need bankruptcy at all, if a consolidation or renegotiation of your debts would serve you better. I know we can get you a good result, so give us a call.

Published by
Chad Van Horn

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