American Apparel Risks Stores in Second Bankruptcy Filing

by San Antonio Attorney

American Apparel filed its second bankruptcy within just over one year.  The company said it has reached a sale agreement for its brand, in addition to its stock of clothing, to Gildan Activewear (GIL).

Gildan, a Canadian clothing company, will pay $66 million for the brand name but it will not acquire any of its bricks and mortar stores.  There are 193 American Apparel stores worldwide.  The company employs around 5,000 workers.  However, it has shuttered stores and terminated employees since then.  It declared bankruptcy in October 2015 and exited in February as a restructured company controlled by creditors.

Gildan plans to retain three of American Apparel’s manufacturing plants in Los Angeles, as stated in a letter to employees of American Apparel.

The entire bulk of American Apparel’s assets are going to be sold off as part of the bankruptcy plan.  The company is still open for other interested buyers who can give competing offers.

A court filing showed that the retailer’s sales declined by almost one-third in 2015.  The company also failed to obtain $40 million in new funding it aimed to raise.  The problems it has included inadequate quality control, a lack of improvement to its online operations and a faulty marketing strategy.

There are many bankruptcies in the retail industry that are high-profile.  A great number of stores are closing, especially in the young adult and teen market, because those consumers purchase more online instead of buying in the malls.

Some of the chains that declared bankruptcy within the past couple of years include Aeropostale, Pacific Sunwear and Wet Seal.  Abercrombie & Fitch’s has closed many stores as its sales continuously dropped, according to reports.

However, American Apparel had different issues, which include a conflict with founder and former CEO andc.

Leave a Comment

Previous post:

Next post: