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American Apparel steps out of bankruptcy
09
Feb '16
Manufacturer and retailer of apparel, American Apparel said it has emerged from chapter 11 as a private company after successfully implementing its plan of reorganisation, approved by the bankruptcy court.

American Apparel's reorganisation plan converted around $230 million of bonds into equity and provided for the infusion of $40 million of exit capital and a commitment for a $40 million asset-backed loan.

“These sources of incremental liquidity will serve as vital support to the turnaround plan, and interest expense will decrease by $20 million,” American Apparel said in a press release.

Under the reorganisation plan, the company also converted its corporate form from a Delaware corporation to a Delaware limited liability company.

"I'm pleased to announce that our plan of reorganisation, which was supported by our unsecured creditors' committee and our bondholders," said CEO Paula Schneider.

“It was also unanimously accepted by our voting creditors and confirmed by the Court, which enabled us to emerge from bankruptcy in just a few short months,” Schneider added.

"With the enormous debt burden removed, we can now turn our full attention to our strategic turnaround, which will benefit our customers, vendors and employees,” she stated.

American Apparels strategy will now focus on; designing fresh products and merchandising; unveiling progressive marketing campaigns and investing in brick-and-mortar retail locations in more promising areas.

It will also include implementing rigorous planning and forecasting for timely product deliveries and to streamline excess inventory.

American Apparel's legal advisor in connection with the restructuring was Jones Day, while FTI Consulting served as restructuring advisor and Moelis & Company served as its investment banker.

Milbank, Tweed, Hadley & McCloy LLP were the legal advisors to the bondholders and Ducera Partners LLC served as restructuring advisor.

American Apparel, LLC is a vertically-integrated manufacturer, distributor, and retailer of branded fashion-basic apparel based in Los Angeles, California.

As of February 1, 2016, the company had approximately 7,900 employees and operated 202 retail stores in 19 countries including the United States and Canada and also operates a global ecommerce site.

In addition, the company operates a wholesale business that supplies high-quality t-shirts and other casual wear to distributors and screen printers. (AR)

Fibre2Fashion News Desk – India


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