American Apparel finally filed for Chapter 11 bankruptcy early Monday. While the stores will remain open, more than $200 million in bonds will be exchanged for stocks as part of the company’s reconstructing. It was a long time coming, as the retail chain has not made profit since 2009. American Apparel will shrink its debt from $311 million to $120 million.
American Apparel founder Dov Charney will receive the blunt of the loss, as his stake in the company will be removed. The bankruptcy comes one year after Charney was ousted from the American Apparel board for allegations of misconduct, including sexual harassment and inappropriate behavior in the workplace and mishandling money. After being fired from the company in 2014, Charney made efforts to exert control of the company, causing the company to file a restraining order against him.
The company said in a court filing that it will remove stores that are unprofitable, but it did not say when or how many. Though the retail chain’s future is unknown, the bankruptcy should absolve enough debt for the company to remain in business.
Cover Photo Credit: dovcharney/Flickr (CC by 2.0)