USA Clothing Company Files For Bankruptcy
American Apparel Inc. filed for voluntary chapter 11 bankruptcy protection today, saying it has reached a restructuring support agreement with a majority of its secured lenders.
American Apparel says it will continue its retail, wholesale, and U.S. manufacturing operations without interruption. They expect to cut debt from $300 million to $135 million - eliminating more than $200 million of bonds in exchange for equity in the reorganized company.
"By improving our financial footing, we will be able to refocus our business efforts on the execution of our turnaround strategy," said Chief Executive Paula Schneider in a statement.
The retailer, based in Los Angeles, has not turned a profit since 2009. They expect to complete the restructuring within 6 months.
American Apparel was founded in 1989 by Dov Charney, who was fired in December for alleged misconduct. He has since filed several lawsuits against the retailer, alleging defamation and breach of employment contract.