Bank­ruptcy pro­tec­tion filed for firm Amer­i­can Ap­parel amid wor­ries

The China Post - - WORLD BUSINESS -

Amer­i­can Ap­parel, the trou­bled chain that boasts of “Made in the USA” fash­ions, filed for vol­un­tary bank­ruptcy pro­tec­tion early on Mon­day on the back of a grow­ing list of woes.

The Los An­ge­les-based com­pany has been em­broiled in a drawn-out le­gal bat­tle with its ousted founder and for­mer chief ex­ec­u­tive Dov Char­ney and has seen de­clin­ing sales since 2010, lead­ing to a se­ries of steep losses.

“This restruc­tur­ing will en­able Amer­i­can Ap­parel to be­come a stronger, more vi­brant com­pany,” said chief ex­ec­u­tive Paula Sch­nei­der in a state­ment.

A deal had been struck with most of Amer­i­can Ap­parel’s se­cured lenders to re­duce its debt and it will con­tinue busi­ness as nor­mal with­out af­fect­ing cus­tomers or staff, ac­cord­ing to the state­ment.

Amer­i­can Ap­parel ex­pects to com­plete the restruc­tur­ing within about six months.

In Au­gust Amer­i­can Ap­parel, which makes its own brand-ba­sic cloth­ing in down­town Los An­ge­les and is known for its racy advertising, an­nounced that net sales in the sec­ond quar­ter plunged nearly 18 per­cent.

And in July the fash­ion chain said it would close some stores and cut jobs in an in­creas­ingly des­per­ate fight to re­verse its slump­ing for­tunes.

Sch­nei­der added: “Amer­i­can Ap­parel is not only an iconic cloth­ing brand but also the largest ap­parel man­u­fac­turer in North Amer­ica and we are tak­ing this step to keep jobs in the USA and pre­serve the ideals for which the com­pany stands.”

U.S. cloth­ing re­tail­ers have been un­der pres­sure from the abun­dance of cheap im­ported mer­chan­dise and the pop­u­lar­ity of Euro­pean ri­vals such as H&M and Zara that spe­cial­ize in fast-chang­ing, low-priced in­ven­tory.

Amer­i­can Ap­parel has also been in a dam­ag­ing le­gal bat­tle with Char­ney, who was ousted in June 2014 amid al­le­ga­tions of sex­ual ha­rass­ment. Char­ney founded the com­pany in Mon­treal in 1989.

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