Sycamore Parties filed with the U.S. Bankruptcy Court an objection to Aeropostale’s Second Amended Joint Plan of Reorganization.
The objection asserts, “Throughout these cases, the Debtors, their management team and their advisors have run a value-minimizing process that demonized the Sycamore Parties and denied any culpability for the demise of the Debtors’ business. Throughout, the Debtors’ assured the Court that their ‘dual-track’ strategy would create “competitive tensions” that would ‘maximize value’ for the benefit of creditors, including the largest prepetition creditors in these cases—the Sycamore Parties. To achieve that end, the Debtors purposefully excluded likely liquidation bidders from their sale process until the eleventh hour (when the Court demanded that the Debtors include them), despite the fact that those bidders may well be the highest, best and only meaningful source of cash recovery for creditors in these cases, and pursued scorched earth litigation tactics against the Term Loan Lenders in an apparent effort to force capitulation. The result? A massive and ongoing professional fee cash burn, a still-deteriorating business, and an un-confirmable liquidating Plan based on a sale of substantially all of the Debtors’ assets to a currently non-existent stalking horse bidder. The process that the Debtors have run in these cases has fostered distrust, disenfranchised the Term Loan Lenders (who conceivably could have been a partner during the cases if provided visibility), forced entrenchment in litigation positions, wasted millions of dollars and at this point has yet to yield a firm purchase offer of any kind. If, as the Term Loan Lenders believe, the Debtors’ challenges to the Term Loan Lenders’ claims in these cases are denied, the Debtors may finally realize that they need to work with the Term Loan Lenders, not against them, to confirm a liquidating plan….The Sycamore Parties stand ready and willing to negotiate amendments to the Plan that will allow them to recover what they are entitled to recover on their claims. They cannot, however, accept the Plan in its current un-confirmable form.”
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