American Apparel prepares to file second Chapter 11 bankruptcy

By

Obi Anyanwu

Published
Oct 27, 2016

American Apparel is preparing for its second bankruptcy according to the American media. Sources that wished to remain anonymous told Bloomberg that the company will file its second Chapter 11 bankruptcy in the coming weeks.

 
The American fashion company filed its first Chapter 11 bankruptcy in 2015, which led to lawsuits from founder Dov Charney, protests from union workers, and Oak co-founders Jeff Madalena and Louis Terrine buying back their Oak brand from the retailer. American Apparel emerged from its Chapter 11 in February with a new reorganization plan that would involve an infusion of $40 million via a third party lender.
 
In August, the Los Angeles retailer hired Houlihan Lokey Inc. to explore a sale. According to Reuters, Authentic Brands Group and Iconix Brand Group both expressed interest in American Apparel.

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Amidst the restructuring, American Apparel shifted its marketing to be less risqué and voyeuristic and scaled back its product offering.
 
In October 3, Paula Schneider stepped down as Chief Executive Officer of the company. She cited many reasons for her departure, but her resignation letter stated that she was unable to pursue certain courses of action due to the upcoming sale led by Houlihan Lokey. Delta Galil hired Schneider as CEO of DG Premium Brands weeks later.