End of the road for former teen apparel giant?

It appears that Aeropostale Inc., which declared Chapter 11 bankruptcy in May, will be selling its assets rather than reorganizing.



The teen retailer said in court papers that “reorganization on a standalone basis is not feasible.” Instead, it will look for a “stalking horse” to make the lead bid at an auction next month, Bloomberg reported.



The proceeds of any sale will go to Aeropostale's creditors. The company listed $390 million in debt and about $354 million in assets in its Chapter 11 petition. It said it would try to hold an auction Aug. 22, if there is any indication of competitive interest.



Aeropostale also said it is still reviewing 11,000 pages of documents and depositions of key individuals that senior lender Sycamore Partners produced during a bankruptcy probe and is evaluating whether to pursue claims against the private equity firm and affiliates, the report said.



In its Chapter 11 filing, Aeropostale asked the court for permission to investigate its largest secured creditor, Sycamore Partners, saying Sycamore used a supplier it controls — MGF Sourcing — to help drive it into bankruptcy.



“While our merchandise repositioning have started to gain traction, the ripple effects of an ongoing dispute with our second-largest supplier put substantial strain on our liquidity while also preventing us from realizing the full benefits of our turnaround plans,” stated Aeropostale CEO Julian Geiger at the time of the filing.



Aeropostale has recorded three consecutive years of losses as its struggles to deal with a teen audience whose spending tastes now favor fast-fashion giants such as H&M as well as online retailers.