American Apparel files for bankruptcy

American Apparel is considering a buyout

(Image credit: Andrew Burton/Getty Images)

published 5 October 2015

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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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.