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Aéropostale Gets Green Light for $160M Loan

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Aéropostale can breathe a little easier after it got the go-ahead Friday to access a loan that would help fund its operations during the upcoming back-to-school season.

The teen retailer received a New York bankruptcy court’s blessing to tap into $160 million in debtor-in-possession (DIP) financing provided by Crystal Financial LLC. The court had previously granted interim approval for the loan on May 5.

According to Aéropostale, this financing—combined with the retailer’s operating cash flow—will allow it to meet its financial commitments and focus on completing its restructuring process.

The struggling chain store filed for Chapter 11 last month, after three-plus years of poor performance. At the time, the company said it intended to emerge in six months with an optimized store footprint, improved efficiencies and fewer expenses, or with a new owner.

Following Friday’s DIP financing approval, Aéropostale reiterated its plan to reorganize and said it will come out the other side during the third quarter of 2016.

“We are looking forward to emerging from this process as a leaner, more efficient business and firmly believe that we will be well-positioned to compete and succeed in today’s retail environment,” Julian Geiger, chief executive officer, said in a press release.

Aéropostale is also aiming to “renegotiate burdensome contracts” and resolve its ongoing disputes with Sycamore Partners, its main moneylender, which has said the retailer has “no realistic chance of success.”

Once-hot teen retailers have been having a tough time of late. Quiksilver filed for Chapter 11 last September, followed by Pacific Sunwear in April of this year.

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