GGP Ggp Inc. (delisted)

By Peg Brickley 

Landlords, liquidators and licensing firm Authentic Brands Group have been declared the winners of a contest for distressed retailer Aéropostale, with an offer of $243.3 million in a deal that preserves part of the business, according to a person familiar with the matter.

The results of a bankruptcy auction that closed late Thursday mean Aéropostale will survive chapter 11 in a streamlined form, with a chain that once numbered 800 stores cut back but still in operation.

Aéropostale said in a statement that it would emerge from bankruptcy "with new ownership as a financially stronger company positioned to compete and succeed in an evolving retail landscape." The company filed for bankruptcy protection in May, unable to keep pace with newer rivals in the teen apparel market.

Major Aéropostale landlords Simon Property Group and General Growth Properties are part of the joint venture that formed ranks just this week, as the sprawling store chain seemed headed to liquidation.

Also part of the Authentic Brands joint venture are liquidators Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC. Terms of the joint venture deal call for at least 229 stores to be kept in operation. The venture partners will be selling off inventory in stores that are slated to be shut down.

The auction that took place in New York pitted the joint venture against Sycamore Partners, a private-equity firm that went into the bidding war with a key advantage.

Sycamore controls a major secured lender to Aéropostale and won a court fight that entitled it to use debt owed it by the retailer, $151 million, as currency at the auction. Rivals had to bid with cash, a disadvantage that caused some buyers that were willing to keep Aéropostale alive to walk away, the person said.

In a statement Thursday, Sycamore said it was pleased with the auction result, which will repay its debt while preserving jobs and more than 200 stores.

Sycamore stayed in the competition until Thursday night, with a bid that, according to the source, would have mean a full-chain liquidation for Aéropostale, with hundreds of stores going dark and thousands of jobs lost. The private-equity firm, which has been critical of Aéropostale's management and expressed doubt about the chain's ability to survive, bid $1 million more than the price offered by the joint venture.

If the joint venture bid fails to close, Sycamore will be declared the winner.

Auction results will be put before a bankruptcy judge Sept. 12, for a ruling on whether Aéropostale's choice of a winner meets the test of being the highest and best for creditors of the troubled company. The sale will close as part of the chapter 11 plan that will carry Aéropostale out of bankruptcy, the company said.

Lillian Rizzo contributed to this article.

Write to Peg Brickley at peg.brickley@wsj.com

(END) Dow Jones Newswires

September 02, 2016 00:23 ET (04:23 GMT)

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