Los Angeles-based clothing manufacturer American Apparel filed for bankruptcy protection on Monday morning.
Despite this, retail stores and U.S. manufacturing operations will remain open, and overseas operations will not be affected.
American Apparel, once synonymous with cool and edgy, was known for emphasizing its made in America premium of domestic manufacturing. It was famous for selling both trendy basics and gimmicky clothing, and creating controversial advertising campaigns. However, over recent years the company experienced declining sales and public hardships. In one prominent example, founder and ex-CEO Don Charney was subjected to a slew of sexual harassment charges by former employees and the company, which he has denied.
According to the Financial Times , the company has outlined a plan with most of its creditors to exchange $200 million in debt for equity, $90 million in what is called ‘debtor-in-possession’ financing, and $70 million in new capital. If this plan is approved, it would wipe out all stockholders, including Charney, who held a company stake as high as 43% in 2014, according to Mashable.
Chief Executive Paula Schneider said 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 merchandizing initiatives, invest in new stores, grow our e-commerce business, and create captivating new marketing campaigns that will help drive our business forward.”