American Apparel is preparing to file for its second bankruptcy in as many years. The situation is a result of capping a tumultuous stretch that includes tumbling sales and a split with Dov Charney. The filing would be done in the next few weeks. The move could help set the stage for sale of the Los Angeles-based company by letting it exit leases and close down part of the retail operation. Yet the plan isn’t final and could change as the holiday season approaches.
It may be recalled that the clothing maker came out of bankruptcy last February when former bond holders - led by Monarch Alternative Capital took over the company. A turnaround plan to return to American Apparel’s roots and focus on basic items like T-shirts and skirts didn’t improve results enough. The company has also hired restructuring firm Berkeley Research Group for guidance, it is learnt.
Earlier this year, American Apparel hired investment bank Houlihan Lokey to consider a sale after receiving interest. The potential buyers are mainly interested in the company’s wholesale unit and the brand. That leaves its roughly 200 retail stores in a state of fix.
