Business of Fashion reports that American Apparel Inc., the Los Angeles-based seller of t-shirts and underwear, with two locations in Harlem, filed for bankruptcy protection as it reorganizes its debt.
The company filed to restructure under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Delaware, the company said in a statement via PR Newswire Monday. American Apparel said it received the support of 95 percent of its secured lenders to implement a pre-packaged reorganisation.
Under the agreement, more than $200 million of bonds will be exchanged for equity interests in the reorganised company and the clothing retailer will have access to financing during and after its restructuring, American Apparel said.
The clothing maker has been in disarray since founder Dov Charney (the 46-year-old Canadian, who once held a meeting wearing only a sock – not on his foot – has been cited in several sexual harassment lawsuits brought by former employees), was suspended and then fired as chief executive officer last December for alleged misconduct. The chain posted five consecutive yearly losses dating to 2010, totaling $338 million, before reporting a $92.9 million loss in the first half of 2015.
The NYTimes reports that the deal, which also includes extra financing from the participating bondholders, would enable American Apparel to keep its manufacturing operations in Los Angeles and its 130 stores from Harlem to Hollywood open, the company said.
No layoffs were announced in the filing, which still requires approval by the bankruptcy court. The retailer’s overseas operations are unaffected by the restructuring, which American Apparel expects to complete within six months.
The Guardian reported that “This restructuring will enable American Apparel to become a stronger, more vibrant company,” chief executive Paula Schneider said in a statement early on Monday.
Editors’ note: under the Board, former CFO, and hedge fund Standard General also saw the end of another Harlem business that went under Radioshack which translates into Harlem job losses.
BUY IT ON Shop HW
Photo via Google Maps