American Apparel files for Ch. 11 bankruptcy protection

“In partnership with our bondholders, we can work towards a new future for the company and concentrate on what matters: making and selling great clothing.”


First, as Forbes explained, clothes are low-cost in both price and quality, allowing customers to buy up styles of the season they like without worrying about the high-priced commitment to an individual article of clothing.

You might have heard a rumor that your favorite purveyor of basics, hoodies, catsuits and booty shorts is going through a few changes.

As part of the bankruptcy agreement, American Apparel will have access to financing after the restructuring, according to the statement.

Why did American Apparel File for bankruptcy?

“This restructuring will enable American Apparel to become a stronger, more vibrant company,” Schneider said.

The Los Angeles company said Monday that its USA retail stores will continue to operate. Now, after years of scandals and falling sales, the company has filed for bankruptcy. A few have taken to social media and news sites to speculate about when the next sale would happen. In 2014, net sales were $608.9 million, but there was another net loss of $68.8 million.

In February, it announced 150 job cuts in its American factories.

American Apparel’s financial problems did not come out of the blue; in fact, they dated a couple of years back.

What’s the reason behind American Apparel’s struggles? As a bonus, the bankruptcy proceedings will pause the various lawsuits against the company, many of which involve Charney.

Continued losses. Fashion is a fickle business.


A Montreal native, Charney started American Apparel in 1989 during his freshman year at Tufts University in Massachusetts. He has denied the sexual misconduct allegations and launched a number of lawsuits against American Apparel, including breach of contract and defamation. It is a portfolio company of West L.A. private equity firm Leonard Green & Partners. The company then accrued over $111.6 million from taking out loans. Its filthy advertisements do not appeal to young shoppers as well. The company ditched its controversial advertising in June 2015 and has revamped itself, but fell flat when it received backlash for its casting call that unprofessionally stated, “No Instagram hoes or THOTS”. But the chain also created a monster, as super-cheap shops including Primark and Forever 21 churned out the same style for half the price; the American Apparel aesthetic was tarnished by its own simplicity. Furthermore, the proposed restructuring plan includes giving unsecured creditors money from a litigation trust and also a $1 million cash payment, as specified in the bankruptcy filing. Share your thoughts below in the comments section.

American Apparel's Bankruptcy Filing Means Huge Sale For Customers