American Apparel bankruptcy filing puts stores at risk
American Apparel is back in bankruptcy court, and this time its chain of brick-and-mortar stores may not survive.
The company filed for bankruptcy on Monday for the second time in just over a year. It also announced a deal to sell its brand, as well as its inventory of clothing, to Canadian apparel company Gildan Activewear.
But Gildan, which is paying $66 million for the American Apparel name, is not buying any of its stores.
American Apparel’s website says it has just over 100 stores, including in downtown Memphis, plus 18 other countries.
The bankruptcy filing does not disclose how many employees American Apparel has.
It had about 10,000 in March 2015, but since then it has closed stores and laid off an unspecified number of workers.
It filed for bankruptcy in October 2015 and emerged in February as a private company owned by its creditors.
The retail industry has suffered a number of high-profile bankruptcies and widespread store closings, particularly in the teen and young adult market, as those shoppers buy more online rather than going to malls.
Among the chains that have filed for bankruptcy in the last two years are Wet Seal, Pacific Sunwear, and Aeropostale. Abercrombie & Fitch has been reporting larger than expected losses.
But American Apparel had unique problems, including a controversial founder and CEO, Dov Chaney, who was fired, twice, in 2014 amid allegations of mismanagement and violations of the company’s sexual harassment policies. He filed a series of lawsuits seeking to regain control of the company.
Paula Schneider, the retail veteran brought in to run the company in his place, left earlier this fall, to be replaced by Chelsea Grayson, who had been chief counsel and chief administrative officer since December 2014.