Retail giant American Apparel has officially filed for bankruptcy. The American company, based in Los Angeles and founded by Montreal native Dov Charney, has revealed that stores will remain open despite the brand's financial woes and that there will be "restructuring" over the next few months.
"This restructuring will enable American Apparel to become a stronger, more vibrant company," CEO Paula Schneider said in a statement.
The company also revealed in the filing that the reorganisation, which includes no plans to lay off employees, will see their debt drop from $300 million to $135 million. The changes are expected to be completed within six months, with the brand's overseas branches staying unaffected.
"Throughout the implementation of this process, American Apparel will continue to operate its business without interruption to customers, employees and vendors," confirmed a statement from the label.
The news doesn't come as a surprise to most industry insiders – back in August the company had already revealed they had "substantial doubt that we may be able to continue" due to a dramatic decrease in sales.
"We believe that we may not have sufficient liquidity necessary to sustain operations for the next twelve months," read the release from the brand, who reportedly failed to meet a scheduled debt repayment to one of its major lenders on Monday. "These factors, among others, raise substantial doubt that we may be able to continue as a going concern."
The press release continued: "The decline in comparable sales was attributable to the lack of new style introduction for the spring and summer selling season."
There's no doubt that it's been a tough five years for American Apparel, who have repeatedly posted losses. Earlier this year, it was revealed that the label's market value had dropped from $540 million to $90 million.