Controversial clothing retailer American Apparel has filed for bankruptcy in the United States, the company said in a press release today, October 5.
The company’s finances have been rocky since 2009 – the company hasn’t turned a profit since then and now they are eliminating $200 million in bonds as a result of the filing, which the company is referring to as a “restructuring support agreement.”
Beyond that, the company’s overall debt will be reduced from $300 million to no more than $135 million, reducing their annual interest expense to $20 million.
“This restructuring will enable American Apparel to become a stronger, more vibrant company,” said CEO Paula Schneider in a statement.
“By improving our financial footing, we will be able to refocus our business efforts on the execution of our turnaround strategy as we look to create new and relevant products, launch new design and merchandising initiatives, invest in new stores, grow our e-commerce business, and create captivating new marketing campaigns that will help drive our business forward.”
Secured lenders will provide $90 million in debtor-in-possession financing.
International stores, including the 30 or so in Canada, will not be affected by the bankruptcy announcement. There are four stores in Metro Vancouver, and six total in B.C.
Financial disparities aren’t the only controversies plaguing the company right now. Founder and former CEO Dov Charney was ousted by the company in December of 2014 in lieu of several claims of sexual harassment and he has responded with a lawsuit against the company.
The company has 227 stores in 19 countries worldwide and employs approximately 9,000 people.
The company says they will “continue to operate [their] business without interruption to customers, employees and vendors” despite the chapter 11 bankruptcy filing.