American Apparel Inc filed for Chapter 11 bankruptcy protection on Monday. The Los Angeles-based company has not made a profit since 2009.
It joins a growing number of U.S. retailers selling to teens and young adults that have been unable to adjust to changing spending patterns and intensifying competition.
One of the only clothing retailers still manufacturing in the United States, American Apparel said its stores and manufacturing operations would continue to operate normally under a restructuring deal reached with most secured lenders. It expects to cut its debt to $135 million from $300 million through the elimination of more than $200 million of bonds in exchange for equity.
The founder, Dov Charney, who was fired as CEO in December for alleged misconduct, including misusing company funds and failing to stop a subordinate from creating blog posts that defamed former employees will bear the brunt.
He has had quite a number of highly publicized lawsuits accusing him of sexual harass for years, even before his upheaval.
Leave your views in comments box below.
Photo Credit: Zimbio.com