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American Apparel Files for Bankruptcy

October 6, 2015

American Apparel Inc., Los Angeles, has reached a restructuring support agreement with 95% of its secured lenders to implement a pre-arranged financial restructuring. 


As part of this agreement, American Apparel and some of its domestic subsidiaries have voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The company expects to complete the restructuring within about six months.


The goal of this reorganization is to enable the American Apparel to implement a comprehensive transformation strategy to revitalize the business and brand, while keeping its production and operations in the United Sates. Throughout the implementation of this process, the American Apparel will continue to operate its business without interruption to customers, employees and vendors, according to the company.


The restructuring support agreement, which has been approved by the company’s board of directors, will reduce the company’s debt and interest payments through the elimination of more than $200 million of its bonds in exchange for equity interests in the reorganized company, and provide the company with access to financing during and after its restructuring.


“By improving our financial footing, we will be able to refocus our business efforts on the execution of our turnaround strategy as we look to create new and relevant products, launch new design and merchandising initiatives, invest in new stores, grow our e-commerce business and create captivating new marketing campaigns that will help drive our business forward,” said Paula Schneider, American Apparel’s CEO, in a statement.



American Apparel’s international operations are not affected by the reorganization in the United States.

For more information, visit americanapparel.net. — L.V. 


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