American Apparel Files for Bankruptcy Again
American Apparel LLC filed for bankruptcy protection again on Monday, its second filing since October 2015, reports Reuters.
The company's struggles are linked to an increasingly competitive teen retailer industry in the U.S., not to mention its scandalous advertising and its founder Dov Charney's misconduct allegations. It's one of many teen retailers that have filed for bankruptcy within the last two years, including Wet Seal and Pacific Sunwear of California, given new spending routines and fewer trips to the mall.
In a court filing, the retailer listed its assets and liabilities between $100 million to $500 million.
Apart from this, Gildan Activewear (GIL) announced it would purchase intellectual property rights linked to the American Apparel brand in addition to some of the company's assets, totaling $66 million in cash.
With the bankruptcy filing, American Apparel can now auction its assets and business, considering Gildan's offer as an initial bid.
American Apparel Chairman Bradley Scher wrote in a letter to employees that the sale proceedings won't impact the day-to-day business in the U.S. Reuters secured a copy of the letter.
After first filing for bankruptcy last year, the company came out of it in February when former bondholders became its owners. Hedge fund Monarch Alternative Capital was at the helm. But that didn't stop dipping sales, which an expensive manufacturing factory in Los Angeles made worse.
The company had been seeking a buyer, and independently announced last week it was putting its U.K. business into the Chapter 11 equivalent.
Teen retail isn't the only sector of the industry that's been suffering amid a rapidly changing industry. Companies like Nike (NKE) are trying to flex other muscles (like athleisure) in order to please consumers.
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