Supplier Turns The Tables On Aéropostale

In supplier disputes, the argument usually stems from corporate buyers placing less favorable payment terms on their vendors, taking advantage of longer payment cycles to stretch out their cash.

A dispute between clothing retailer Aéropostale and one of its top suppliers, however, has turned the tables on this typical case.

Reports on Friday (May 13) said the company has now settled the dispute with supplier MGF Sourcing. Aéropostale had accused MGF Sourcing of forcing stricter payment terms on the company, which ultimately contributed to Aéropostale’s eventual filing of Chapter 11 bankruptcy earlier this month.

MGF Sourcing is owned by Sycamore Partners, the largest lender for Aéropostale, according to reports.

Their settlement needs to be approved by a bankruptcy judge, but if it moves forward, reports said the agreement would allow Aéropostale to regain its flow of inventory back into store fronts.

But after final deliveries are made and invoices are settled, Aéropostale will reportedly sever ties with the supplier after they had signed a 10-year agreement two years ago.

Part of their agreement sees MGF withdrawing its objection to Aéropostale’s bankruptcy loan, valued at $160 million and lent by Crystal Financial LLC, according to reports. Aéropostale will close 154 stores across the nation but continue to operate its remaining 626 stores, reports said.

Earlier this year, Aéropostale narrowly avoided a departure from the New York Stock Exchange after it agreed to continue listing the firm. Aéropostale had reportedly been out of compliance with NYSE listing requirements due to falling global market capitalization worth.