American Apparel Emerges From Bankruptcy
After four months in bankruptcy, Los Angeles clothing maker American Apparel announced on Feb. 5 that it had exited Chapter 11 bankruptcy after a reorganization plan was approved days earlier by the U.S. bankruptcy court.
American Apparel, which was a publicly traded company whose stock was sold on the New York Stock Exchange, is now a privately held enterprise.
The company’s reorganization plan converted approximately $230 million of bonds into equity into American Apparel and provided for the infusion of $40 million of exit capital and a commitment for a $40-million, asset-backed loan.
With the secured creditors taking a major ownership American Apparel, the company’s interest expense will decrease by $20 million a year.
“This is the start of a new day at American Apparel,” said Chief Executive Officer Paula Schneider, who came on board in early 2015 after the company’s founder Dov Charney was fired as the chairman, chief executive and president.
“With the enormous debt burden removed, we can now turn our full attention to our strategic turnaround, which will benefit our customers, vendors and employees,” Schneider added. “Our strategy will focus on: designing fresh products and merchandising; launching new partnerships to grow the e-commerce platform; unveiling progressive advertising and marketing campaigns; investing in brick-and-mortar retail locations in more promising areas; and implementing rigorous planning and forecasting for timely product deliveries and to streamline excess inventory.”
The vertically operated company that is the largest apparel manufacturer in the United States is also a retailer that currently has 227 stores in 19 countries, down slightly from the 245 outposts it operated a little more than one year ago. It employs about 8,000 people in factories, stores and its own distribution center
