A bankruptcy judge gave the final approval for General Growth Properties and Simon Property Group’s purchase of distressed teen clothing retailer Aeropostale, thus saving 229 stores from closure.
The two real estate investment trusts formed a joint venture with Gordon Brothers Retail Partners and Hilco Merchant Resources to buy the ailing clothing chain. They won a bankruptcy auction on Sept. 2 to buy the stores for $243.3 million . The sale required approval from a bankruptcy judge, Bloomberg reported.
“This could be a model for future restructurings in the years ahead,” Ray Schrock, a lawyer for Aeropostale, told the court.
The new owners will keep the clothing chain alive, but the number of stores will dramatically decrease from around 800 to 229. Private equity firm Sycamore Partners had offered $1 million more for the company, but its plan was to liquidate all of Aeropostale’s assets.
GGP and Simon Property Group were both Aeropostale landlords when the company went bankrupt in May and closed its flagship store in Times Square. When only liquidation offers came forward, the two REITs formed a consortium to buy and revive their tenant. The deal includes $74 million to fund a Chapter 11 plan, the website reported, which will be confirmed at a hearing slated for November. [Bloomberg] — Miriam Hall