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Aéropostale Battle With Sycamore Partners Rages On

Aéropostale will not go quietly into the night.

The bankrupt teen clothing chain filed a lawsuit against Sycamore Partners in New York late on Friday to disqualify the private-equity firm and its affiliates from credit bidding.

Credit bidding is a right that a secured creditor has in bankruptcy sales which allows them to control the sale of their collateral. In this case, Sycamore would be able to use the $150 million it is owed as part of a bid for Aéropostale, which is up for sale in a court-supervised auction.

The retailer is also seeking the subordination of Sycamore’s claim, asking the court to reduce how much the firm would be repaid on its loan.

“These claims are without merit and include numerous allegations that are nothing more than irresponsible fabrications,” a Sycamore Partners spokesman said in a statement sent to Reuters on Saturday. “This is another in a series of desperate attempts by Aéropostale to try to shift the blame for its disastrous financial performance and the mismanagement of the company by its officers and directors.”

Aéropostale has repeatedly accused Sycamore of orchestrating its demise. The retailer, which filed for Chapter 11 in May after years of poor sales, said it was forced to do so after MGF Sourcing—a Sycamore-affiliated vendor—breached their contract by demanding payment up front instead of in 60 days’ time. Aéropostale said it only started working with MGF because it was part of the conditions of the $150 million loan it received from Aero Investors LLC, a Sycamore-backed lender, in 2014.

The retailer included 26 documents as part of the lawsuit to back up its claims.

Going-out-of-business sales are currently taking place at 154 of Aéropostale’s 800 stores. The business is slated to go on the auction block on Aug. 22.