American Apparel files for bankruptcy
Early Monday, retailer American Apparel filed for Chapter 11 bankruptcy protection, seeking to trim about $200 million in debt among falling sales, changing tastes, and an ongoing legal soap opera involving ousted founder Dov Charney. The reorganization plan, if approved by the bankruptcy court in Delaware, would wipe out Charney's $8.2 million stake in the company, as well as those of other shareholders, The New York Times reports, placing control of the company largely in the hands of five hedge funds or investment firms. The company didn't announce any new layoffs in the filing and said its 130 U.S. stores and Los Angeles manufacturing operation would stay open during the restructuring process.
American Apparel, launched in 1989, was "the one-time arbiter of edgy made-in-America cool," notes The Times, but its fallen-on-hard-times story isn't unique: "Stores that cater to teenagers, like American Apparel, Abercrombie & Fitch, and Aeropostale, have especially struggled in the face of an onslaught of 'fast-fashion' labels and an increasingly fickle demographic more interested in the latest app or gadget than a pair of jeans."
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