Sycamore Partners, liquidators bid on bankrupt U.S. teen retailer Aeropostale

August 26, 2016 3:58 PM EDT

A customer enters an Aeropostale store in Broomfield, Colorado, United States May 14, 2015. REUTERS/Rick Wilking

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By Jessica DiNapoli

NEW YORK (Reuters) - Bankrupt U.S. teen retailer Aeropostale Inc received bids this week for its business from private equity firm Sycamore Partners, as well as liquidators, firms that wind down businesses, according to people familiar with the matter.

Investment firm Versa Capital Management LLC did not submit a bid for the business, the people said. Versa had been preparing a stalking horse offer for Aeropostale as a going concern business, and the retailer had received court approval to pay some of the expenses incurred by Versa in putting together the proposal.

A U.S. bankruptcy court judge on Friday issued a decision siding with Sycamore in its fight with Aeropostale, who accused the firm of conducting a "loan to own" scheme and pushing the retailer into bankruptcy. Aeropostale had asked the judge to bar Sycamore from using the $150 million it is owed as credit to bid in the auction, but the judge denied that request.

Sycamore and Versa declined to comment. The sources were not identified because they were not authorized to speak to the media.

In a statement, Aeropostale said it is disappointed with the court's decision.

"Aeropostale stands by the accuracy and truthfulness of everything said and documented by it during the proceedings," the company said.

Bids for the company were due on Thursday, and an auction is scheduled to be held on Monday, Aug. 29. It is unclear what Sycamore's plans are for the business, should it win the auction.

Aeropostale also received bids for some of its leases and its business, a shoe and apparel shopping site, said one of the people.

Aeropostale filed for bankruptcy in May amid slumping sales and intense competition from fast fashion retailers.

At least five U.S. teen retailers, including Wet Seal LLC and Pacific Sunwear of California Inc , have filed for bankruptcy in the past two years, as the spending habits of young people shift and they visit malls less often.

(Reporting by Jessica DiNapoli; Editing by Dan Grebler, Bernard Orr)

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