US – The textile specialist American Apparel, based in Los Angeles, is insolvent. According to a press release of the financially stricken fashion company, the clothing chain filed for bankruptcy protection under Chapter 11 of the American insolvency law on October 5, 2015. Before lodging the petition for insolvency, the company came to an agreement with the majority of its creditors to restructure the debts. This step will enable American Apparel to “become a stronger, more dynamic company,“ explained the company’s boss, Paula Schneider. According to the submitted documents, 95% of the creditors agree with the restructuring plans and are waivering part of their claims. In return, they will receive shares in the company. In this way, American Apparel intends to reduce its current debts of 300 mil. US dollars (approx. 267 mil. Euros) down to 135 mil. US dollars (approx. 120 mil. Euros).
According to company statements, the 130 branches and production sites will remain unaffected by the insolvency, operations are to carry on running as before. According to a report in the New York Times, the international business is also not affected by the planned restructure measures, however the plan allegedly means that the existing shareholders, including also the company founder, Dov Charney, will suffer large losses. Charney founded the label in 1989 and caused a stir with his new concept to manufacture in Los Angeles instead of in cheap labour countries. After being accused of sexual harassment, Charney was fired in the summer of 2014, he is nevertheless still a shareholder of American Apparel.