Reuters reports that bankrupt teen retailer Aeropostale filed a motion against its lender, private equity firm Sycamore Partners, in bankruptcy court late on Friday, accusing it of plotting a "loan to own” scheme to push the chain into bankruptcy.
According to the Reuters article, Aeropostale asked a U.S. bankruptcy court judge to bar Sycamore from using the $150 million it is owed as credit to bid on the company, which is up for sale in a court-supervised auction.
The Reuters aritcle notes that a spokesperson for Sycamore partners denies the claims and characterizes them as "irresponsible fabrications.”
The Reuters article also notes that Aeropostale says in the filing that Sycamore, through its apparel sourcing company, MGF Sourcing, imposed "onerous" payment terms on the retailer in attempt to hurt its cash position, causing defaults under other credit agreements leading to bankruptcy. Aeropostale had to make merchandise purchases through MGF as a condition of the loan Sycamore affiliates made to the retailer.
View the entire Reuters article: Aeropostale Accuses Sycamore Partners of 'Loan to Own' Scheme