Fashion Law: American Apparel Files for Bankruptcy
Like clockwork, American Apparel has done it again! Following on the heels of last weeks’ fashion law post where we reported on the brand’s former president of wholesales plans’ to sue for discrimination and wrongful termination, the fast fashion retailer has struck headlines again, but perhaps for one of the last times.
It’s no secret that the company has been fighting to stay afloat since the ongoing saga that overthrew founder Dov Charney. Amidst the steady decline of profit sales, the battle has come to an end, as the retailer filed for chapter 11 in the US Bankruptcy court in Delaware this morning.
Upon this filing, American Apparel plans to restructure its debt while creditors have dedicated $70 million of new capital to assist the company in its reorganization and recapitalization efforts. The brands retail stores, in addition to wholesale and US manufacturing operations, will remain open.
The retailer commented: “The restructuring support agreement, which has been approved by the company’s board of directors, will substantially reduce the company’s debt and interest payments through the elimination of over $200 million of its bonds in exchange for equity interests in the reorganized company.”
The agreement will also provide monetary support to American Apparel during the restructuring process and will assist in cutting the company’s overall debt by more than half that was it currently valued ($300 million).
For more information regarding chapter 11 please visit www.fashionboss.comby