Home / Knowledge / News / Fashion / American Apparel files for bankruptcy after huge losses
American Apparel files for bankruptcy after huge losses
06
Oct '15
American Apparel Inc., a clothing chain known for provocative marketing and boardroom drama, has filed for bankruptcy protection after years of losses.

As part of a prearranged Chapter 11 restructuring, the Los Angeles-based company will reorganize its debts, which have which have grown bigger than its assets. More than $200 million of bonds will be exchanged for equity interests in the reorganized company, it said in a press release. American Apparel will remain in business during the process.

Under the restructuring support agreement, American Apparel's secured lenders will provide approximately $90 million in debtor-in-possession (DIP) financing. These supporting creditors have committed $70 million of new capital to support the reorganization and recapitalization of the business. The company anticipates that such financing will be more than sufficient to fund its ongoing operations and pave the way for a successful reorganization. As a result of the reorganization, American Apparel's debt will be reduced from $300 million to no more than $135 million, and annual interest expense will decrease by $20 million.

"This restructuring will enable American Apparel to become a stronger, more vibrant company. 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 Chief Executive Officer.

American Apparel's filing for bankruptcy follows a clash between the company's controversial founder Dov Charney and the board that led to his ouster last year, but the company had been in financial crisis for much longer. Successive losses every year since 2010 whittled down the company's worth and by the end of June 2015, American Apparel ended up with a negative book value with liabilities ballooning to $161 million more than its assets. (SH)

Fibre2Fashion News Desk – India


Must ReadView All

Courtesy: Jens Mahnke from Pexels

Textiles | On 22nd Oct 2018

India levies anti-dumping duty on flax yarn from China

The ministry of finance, Government of India, has imposed definitive...

Courtesy: Donear

Textiles | On 22nd Oct 2018

Aspiring middle class shaping menswear fabric trend

The key trends shaping menswear fabric include a new middle class and ...

Belarusian petrochem firms sign contracts with Russia

Textiles | On 22nd Oct 2018

Belarusian petrochem firms sign contracts with Russia

Belarus recently signed contracts worth nearly RUB 12 billion for...

Interviews View All

Riddhika Shah, SS Homme

Riddhika Shah
SS Homme

'Worsted wool is the ideal fabric for menswear'

Kaizad Hansotia, GetNatty

Kaizad Hansotia
GetNatty

Competition is the best thing that can happen to a startup

Shiladitya K Joshi, Truetzschler India Private Limited

Shiladitya K Joshi
Truetzschler India Private Limited

India ITME provides a platform to interact with our stakeholders

Erik Sy,

Erik Sy

Manila-based CustomThread is a start-up offering premium custom apparel...

Carolin Russ,

Carolin Russ

Weko, Weitmann & Konrad GmbH & Co KG, based in south Germany, is...

Rajat Jaipuria,

Rajat Jaipuria

Activewear brand Soul Space promotes organic cotton farming and...

Johan Berlin, Investkonsult Sweden AB

Johan Berlin
Investkonsult Sweden AB

Investkonsult Sweden AB are consultants in the nonwoven and absorbent...

Mark Brill, Birmingham City University (BCU)

Mark Brill
Birmingham City University (BCU)

<div>A technological breakthrough could see people getting messages about...

S Ziya Gumuser, Teknomelt

S Ziya Gumuser
Teknomelt

Turkish nonwoven manufacturer Teknomelt has been around for only seven...

Bani Batra,

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Robert Brunner, Devereux

Robert Brunner
Devereux

Golfwear and menswear brand Devereux is set for greener pastures. Robert...

Mike Hoffman, Gildan Activewear SRL

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


October 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Advanced Search