LA-based brand American Apparel may be filing for bankruptcy within the next 12 months due to lack of liquidity, says statements included in its 2015-second quarter financial results released recently. The brand incurred losses from operations and negative cash flows from operating activities, during the first six months of 2015. The brand has already been working with its advisers and has begun discussions with certain key financial stakeholders to analyse potential strategic and financial alternatives for the future.

The options that the brand may look at are: new capital raising transactions or refinancing. It may also consider amendments to or restructuring of the existing indebtedness and other obligations, and even consider other restructuring and recapitalisation transactions. The results of these discussions are unknown, states the company.

There is quite a bit of uncertainty about the ultimate outcome of discussions. There is no assurance that these efforts would consequently transpire into any transaction or agreement. Also, there is no surety if such a transaction or agreement, if proposed and/or implemented, would be successful.

Besides, irrespective of the fact that such transactions or agreements were implemented or successful, there was a possibility that the brand’s existing and any new investors could suffer substantial or total losses on their investment in their common stock.