American Apparel files for second bankruptcy in just over a year
By Jessica DiNapoli
NEW YORK (Reuters) - American Apparel LLC filed for its second bankruptcy protection in just over a year on Monday, weighed down by intense competitive pressures facing U.S. teen retailers and a rocky relationship with its founder.
The second bankruptcy comes as the retailer struggles to overcome years of losses and rising online competition. The company became a part of popular culture for its racy advertising and mercurial founder, Dov Charney.
American Apparel, known as much for its sexually charged advertising, listed assets and liabilities in the range of $100 million to $500 million, according to a Delaware court filing.
Separately, Canadian apparel maker Gildan Activewear Inc said it agreed to buy intellectual property rights related to the American Apparel brand and certain assets from American Apparel for about $66 million in cash.
Gildan will not be purchasing any retail store assets, it said in a statement.
The bankruptcy filing allows American Apparel to hold an auction for its assets and business under which Gildan's proposed acquisition would constitute the initial bid.
"Gildan has asked for the opportunity to maintain certain of our manufacturing, distribution and warehouse operations in and around Los Angeles," American Apparel Chairman Bradley Scher said in a letter to employees, a copy of which was obtained by Reuters.
Throughout the competitive sale process, American Apparel will run its business as usual in the United States and this will have no noticeable effect on day-to-day operations in the United States, Scher said in the letter. Continued...