American Apparel No More?
The bankruptcy comes more than a year after the company ousted its controversial CEO, Dov Charney.
American Apparelfiled for Chapter 11 bankruptcyon Monday following a rocky period in which its made-in-the-U.S. model faltered and its controversial former CEO became embroiled in controversy over his behavior in the workplace.
The embattled retailer said it has already reached agreements with creditors representing 95 percent of its secured debts to execute a restructuring plan.The deal, which would require a court’s approval, will allow the company to stay in business, American Apparel said in a statement.
American Apparel, which flirted with bankruptcy as early as 2011, has about 8,500 employees at six factories and 230 stories in the U.S. and 17 countries. The company famously bet its business model on clothing made in the U.S. In a court filing, it said it has about 4,600 employees in Los Angeles and the L.A. area.
The company said in a court filing that it plans to shed unprofitable stores, though it did not identify how many it expects to close.American Apparel has slumped in competition with agile retailers such as H&M and Forever 21 that have appealed to Millennial consumers with cheaper, more fashionable products. American Apparel in August had reported that sales for its second quarter fell 17.2%, continuing a downward spiral in the last several years that has severely drained its coffers.