Dive Brief:

• Private equity firm Sycamore Partners on Monday filed an objection to Aeropostale’s bankruptcy reorganization plan, saying the teen apparel retailer has wasted millions of dollars during the process without garnering “a firm purchase offer of any kind,” according to news reports.

• Sycamore maintains that liquidation, not a sale, is the preferred option for Aeropostale's creditors. But during a hearing Tuesday in New York bankruptcy court, creditor attorney Robert Feinstein said Aeropostale's lesser creditors are on board with its reorganization plans, the Wall Street Journal reports.

• Private equity firm Versa Capital Management is reportedly in talks to buy 500 Aeropostale stores, mostly in malls in the U.S.

Dive Insight:

The latest dispute between Sycamore and Aeropostale has already led to a delay of the retailer’s auction from Aug. 18 to Aug. 29, and could doom its sale prospects.

Aeropostale sold a major stake to Sycamore in 2014. The deal included an agreement to source with Sycamore-owned MGF, a clothing manufacturer and supply chain management company. The MGF partnership ended up being a drag on the company, and Aeropostale contends it is a major reason for its bankruptcy troubles.

The two sides reached a settlement in June requiring the retailer "to pursue a value-maximizing strategy for the benefit of the company's creditors by concluding a reorganization or sale of the company's assets during the company's back to school sales season," according to a statement emailed to Retail Dive.

Sycamore argues that mismanagement, not its sourcing stipulations, is the reason Aeropostale is bankrupt, and the firm now wants to leverage its $150 million in loans at auction. Aeropostale’s attorney told the court that would likely preclude any other offer.

If Versa prevails at auction, some 500 Aeropostale stores would remain open, saving thousands of jobs. Versa in May 2015 took over Wet Seal clothing stores and invested $10 million to help right the company, after the firm prevailed at that teen retailer’s bankruptcy auction last year. Versa hasn’t yet proffered a firm bid, the Wall Street Journal reports.

Experts tell Retail Dive that Aeropostale's struggles are due to the company sticking too closely with the logo-centric trends abandoned by shoppers, while Abercrombie & Fitch and American Eagle, the so-called "other two A's" of teen apparel, moved on. Equally problematic, Aeropostale hasn’t found a way to sell apparel without massive, margin-killing discounting.