Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officer.
As previously reported, on May 4, 2016, Aéropostale, Inc. (the “Company”) and each of its subsidiaries (collectively with the Company, the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) seeking relief under Chapter 11 of Title 11 of the United States Code. The Chapter 11 cases are being administered jointly under the caption “In re Aéropostale, Inc., et al.”, Case No. 16-11275 (the “Chapter 11 Cases”).
On October 5, 2016, the Bankruptcy Court approved that certain Engagement Agreement (the “Agreement”) by and between the Company and Development Specialists, Inc. (“DSI”), dated September 19, 2016. The Agreement provides for, among other things, the services of William A. Brandt, Jr., as Chief Restructuring Officer (“CRO”) of the Company, and the services of other DSI personnel to carry out those duties and responsibilities under the Agreement. Mr. Brandt’s primary responsibilities will include: assisting the Company in carrying out Court-approved agreements including the sale of substantially all of the Debtors’ business assets; implementing the post-closing, pre-confirmation wind-down of the estates; monitoring the store closing sales being conducted; overseeing the budget process in connection with the use of cash collateral and payment of estate liabilities; and assisting in the further development and implementation of a Chapter 11 Plan. Mr. Brandt will report directly to the Board of Directors of the Company.
Mr. Brandt, 67, has served as the Chief Executive Officer of DSI since 1976, and has forty years of experience in the practice of turnarounds and restructurings.
Pursuant to the terms of the Agreement, Mr. Brandt and any other DSI employees will remain employed by DSI. Neither Mr. Brandt nor any other DSI employee will receive any compensation directly from the Company or participate in any employee benefit plan.
The Company has agreed to compensate DSI for the services of Mr. Brandt at a fixed rate of $100,000 per month, payable in advance, and to compensate DSI for the hourly services of additional personnel staffed to this matter at rates ranging from $190 to $660 per hour. In addition, the Company has agreed to reimburse DSI for its reasonable costs and expenses. DSI or the Company may terminate the Agreement for any reason upon five (5) business days’ written notice; provided that the Company will remain obligated to pay and/or reimburse DSI for all fees and expenses accrued under the Agreement as of the effective date of the termination. The Company has agreed to indemnify DSI and its employees for all claims arising from, or in connection with, the Agreement.
Other than as noted above, there is no arrangement or understanding pursuant to which Mr. Brandt was appointed CRO of the Company. Mr. Brandt has no family relationships with any executive officers or directors of the Company, or persons nominated or chosen by the Company to become directors or executive officers. Furthermore, the Company is not aware of any transaction requiring disclosure under Item 404(a) of Regulation S-K.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the actual Agreement filed as Exhibit 10.1 hereto and incorporated herein by reference.