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Business avoids liquidation with Chapter 11 bankruptcy

A generation ago, young people flocked to malls to purchase clothing and other goods. Now, through websites like Amazon, New Yorkers are able to buy what they want from the convenience of their own homes. As a result of this shift in buying strategy, many brick and mortar stores have suffered financial losses.

Once such struggling business is Aéropostale, which is a clothing chain that targets a young demographic. The company once boasted stores in malls across the country but has had to reevaluate its corporate strategy as its financial power began to dwindle. Earlier this year, the company filed for bankruptcy and it appeared that it would have to close all of its stores through liquidation proceedings. Just recently, however, Aéropostale received some good news.

Two major mall owners agreed to buy Aéropostale and its debt problems. Though the new owners plan to close more than half of the existing open stores, they do plan to keep around 230 stores open and in operation. As a result of this business purchase Aéropostale will continue to operate under a reorganized plan through Chapter 11 bankruptcy.

Chapter 7 bankruptcy, which requires an individual or business to sell of its assets in order to pay off creditors, is often the end for a company that is facing debt issues. However, Chapter 11 lets businesses continue to work toward strong financial footing as they regroup and reorganize their operations.

The future will show if Aéropostale's reorganization will be successful, and readers of this bankruptcy law blog who wish to learn more about commercial bankruptcy are invited to speak with their own bankruptcy counsel.

Source: money.cnn.com, "Aéropostale lands bankruptcy deal to keep 230 stores open," Jakie Wattles, Sept. 12, 2016

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