American Apparel bankrupt
October 5, 2015
Amerian Apparel filed for bankruptcy protection on Monday amid a growing list of troubles facing the Los Angeles-based company.
The clothing manufacturer, which boasts of "Made in the USA" fashions, has seen declining sales since 2010, resulting in a series of huge losses. Furthermore, the company is embroiled in a drawn-out legal battle with its ousted founder and former CEO Dov Charney.
"This restructuring will enable American Apparel to become a stronger, more vibrant company," said CEO Paula Schneider in a statement. She also noted that a deal had been struck with most of the firm's secured lenders to reduce its debt and that the company will continue business as normal without affecting customers or staff.
The restructuring is expected to be completed within about six months.
In August, American Apparel announced that net sales in the second quarter plunged nearly 18 percent. That came after the fashion chain had said in July that it would close some stores and slash jobs as part of its efforts to reverse its slumping fortunes.
US clothing retailers have been under pressure from the abundance of cheap imported merchandise and the popularity of European rivals such as H&M and Zara that specialize in fast-changing, low-priced inventory.
sri/uhe (AFP, Reuters)