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This cult retailer has filed for bankruptcy.

American Apparel has filed for voluntary bankruptcy protection, in a bid to reduce its debt from $300 million to no more than $135 million.

American Apparel operates five stores in Australia, with sites across Melbourne, Adelaide and Sydney.

The stores will not be affected by the motion.

Retail sites, wholesale and US manufacturing operations will also continue without interrupton.

American Apparel plans to recapitalise through the consensual pre-arranged bankruptcy filing.

The company has struck a deal with its secured lenders and expects to complete a restructuring program within six months.

Under the restructuring support agreement, American Apparel's secured lenders will provide approximately $90 million in debtor-in-possession (DIP) financing.

These supporting creditors have committed $70 million of new capital to support the reorganisation and recapitalisation of the business.

American Apparel CEO Paula Schneider said the financing will be more than sufficient to fund its ongoing operations and pave the way for a successful reorganisation.

"This restructuring will enable American Apparel to become a stronger, more vibrant company.

"By improving our financial footing, we will be able to refocus our business efforts on the execution of our turnaround strategy as we look to create new and relevant products, launch new design and merchandising initiatives, invest in new stores, grow our e-commerce business, and create captivating new marketing campaigns that will help drive our business forward."

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