Bankrupt teen retailer Aéropostale Inc. has received bankruptcy court approval to pay Versa Capital $500,000 in expense reimbursement.

A spokeswoman said a Manhattan bankruptcy court judge granted approval for the reimbursement on Monday at a bench hearing. An order by the judge is in the process of being docketed.

The approval paves the way for a sale of the company. The chain is in talks with private equity firm Versa Capital to be the so-called “stalking horse” bidder. The agreement needs to be finalized by Thursday, according to the current timetable. A bankruptcy court auction, if one were to be required because other bidders are jumping into the game, would be held later this month.

According to court papers filed last week, the current negotiations contemplate a “cash payment for debtors’ inventory, assumption of more than 500 existing and modified unexpired store leases and continued employment for thousands of store-level and corporate employees.” The court document also emphasized that a “going concern operation is critical to maximizing the value of the debtors’ international business, which requires support from the U.S. operations in areas such as buying, G&A and sourcing to realize the business’s full value.”

The stalking horse agreement typically sets the baseline price and subsequent bidding amounts for the assets up for sale.

Whether other bidders could come forward is still unclear. Also unclear is whether private equity firm Sycamore Partners, whose affiliate Aero Investors is Aéropostale’s prepetition lender, intends to credit bid for the assets. That in part was the basis for the request for court approval for the expense reimbursement since Versa was unwilling to move forward with further due diligence without the reimbursement guarantee.

A credit bid from Sycamore, if it were to provide an offer under those terms, would in effect allow it to use the dollar value of its claims as a component of a bid. If it were to be successful, Sycamore’s claims in effect would be exchanged for an equity stake in the new post-bankruptcy entity. The financial firm’s affiliate provided a prepetition loan of $150 million.

Whether Sycamore can even submit a credit bid still has to be determined by the bankruptcy court. Sycamore and Aéropostale have been locked in a bitter battle over certain events leading up to the retailer’s bankruptcy filing. The company, which has charged Sycamore with a “loan to own scheme designed to bankrupt the debtors,” is trying to block a credit bid and get Sycamore’s claims moved lower on the totem pole. Sycamore in turn has repeatedly denied any wrongdoing.

The two firms are headed to a trial slated for Monday.