Retail

Bankrupt Aeropostale Wants To Pay Its Execs Their Bonus — They Just Need A Judge To Approve

Since bonuses are generally reserved for good — or at least adequate — performance, it may seem a bit peculiar that Aeropostale is so adamant about paying the executive team their bonus, given that said executive team was at the helm when the firm declared bankruptcy.

But that is exactly what Aeropostale is asking to do. They just need their bankruptcy judge to sign off on it.

All in, the retailer is asking federal judges in bankruptcy court to let them pay out $3.41 million in bonuses to 10 top executives, according to court papers detailed by Marketwatch.

The pay is specifically to compensate said executives for their work during the bankruptcy process and would be contingent on a successful exit from Chapter 11 and sales revenue goals.

This comes along with a request  to pay as much as $1.45 million in bonuses to 41 hard-to-replace workers, in an effort to retain them until Oct. 25, according to Marketwatch.

“During this process, the [retailer] started experiencing the loss of some of their highly valuable employees throughout critical areas of their businesses,” stated court documents filed in U.S. Bankruptcy Court in Manhattan and cited by Marketwatch.

“These voluntary resignations included members of the [retailer’s] leadership team and other employees that performed critical functions, including [its] director of tax, director of strategy and customer insights, senior director of social media, senior director of operations procurement, and various regional managers.”

The ride through Chapter 11 has been rough so far, and many are reporting it is simply unclear what, if any, path forward the teen retailer has, given that their young market segment has largely moved on. The firm also faces a protracted dispute with shareholder Sycamore Partners, which had invested in the company and provided it a $150 million loan in 2014.

Operations are currently financed through a $160 million loan from Crystal Financial. The firm has reported that it expects to have emerged from Chapter 11 within six months (of April when they filed).

In March, Aeropostale reported that Q4 same-store sales (including eCommerce) fell 6.7 percent  year over year. Competitors at Abercrombie & Fitch and American Eagle Outfitters saw gains during the same time period.

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