Teen retailer Aé ropostale Inc., plagued with declining mall traffic and increasing competition, acknowledged it is unlikely it will be able to reorganize and will focus on searching for a buyer.

A Friday court filing outlining how Aé ropostale plans to repay creditors says a reorganization of the retailer "on a stand-alone basis" isn't in the cards. While Aé ropostale has yet to line up a stalking horse, or lead, bidder, to take over its business, the company says it will focus on finding a buyer.

Weeks earlier, Aé ropostale won court approval to run a dual-track process after saying in court filings that it was in discussions "with multiple well-capitalized and financed parties." The company sought time to ride out the back-to-school season. But Aeropostale's lender, backed by private-equity firm Sycamore Partners, called for a speedier sale timeline instead of a reorganization.

Now, Aé ropostale said it would focus on the coming Aug. 22 auction.

A source familiar with the matter said Sycamore is considering taking a deeper look at a sale process that Aé ropostale has previously said was attracting the interest of potential buyers. The private-equity firm may also investigate Aeropostale's public financial disclosures, this person said.

Reached Monday, an Aé ropostale spokeswoman declined to comment.

Meanwhile, court papers say Aé ropostale continues to review more than 11,000 documents it received from the Sycamore-backed lender, known as Aero Investors LLC. The retailer has accused a Sycamore-backed vendor, MGF Sourcing, of imposing stricter payment terms and halting merchandise shipments, ultimately pushing it into bankruptcy in May.

Sycamore disputes the allegations.

Under the chapter 11 plan that Aé ropostale filed on Friday, Aero Investors stands to be paid in full, unless the retailer brings legal claims against it in connection with its bankruptcy filing.

The plan says it is likely that unsecured creditors, a group owed an estimated $340 million, will go empty-handed.

An outline of the chapter 11 plan is set to go before a Manhattan bankruptcy judge on July 26. If approved, the plan will put to a creditor vote before it is presented for court approval.

Aé ropostale sought chapter 11 protection in early May and quickly began closing more than 150 of its 800 stores, hoping to restructure around the survivors.

Similarly, fellow insolvent retailer Sports Authority Holdings Inc. filed for bankruptcy protection earlier this year with the hope of attracting a strategic buyer to reorganize the company. However, Sports Authority's assets were sold to a trio of liquidators who began going-out-of-business sales at all of its 450 stores in May.

Peg Brickley contributed to this article.

Write to Lillian Rizzo at Lillian.Rizzo@wsj.com

(END) Dow Jones Newswires

July 18, 2016 16:35 ET (20:35 GMT)