Retailer American Apparel Inc. wants to maintain tight control on its bankruptcy case as it prepares for an upcoming vote by creditors to approve its plan to exit bankruptcy.
The Los Angeles-based company, which filed for Chapter 11 bankruptcy protection in October, has asked a judge for a 90-day extension to its exclusive period for filing a reorganization plan, Reuters reported.
Patrick T. Fallon | Bloomberg
American Apparel said in court documents filed Monday in U.S. Bankruptcy Court in Wilmington, Delaware, that it was asking for a 90-day extension out of an “abundance of caution, ” according to Reuters.
The extension would block any alternative plans from being filed, including warding off a possible unsolicited takeover bid by former Chief Executive Dov Charney. The company said that multiple plans would likely only increase costs and “quite likely impede — rather than facilitate — meaningful progress” toward the company’s exit from bankruptcy, reported Women’s Wear Daily.
The current exclusivity period ends Feb. 2, but the extension would give it exclusive control of its case through May. The company said it still expects to emerge from bankruptcy by February.
A hearing on the company’s reorganization plan is set for Jan. 20.
As part of its reorganization plan, American Apparel obtained $90 million in debtor-in-possession financing to keep operating. It also said it would close underperforming stores, including nine American Apparel stores and four Oak New York stores.
WWD reported the retailer last week asked a bankruptcy judge for permission to close eight additional U.S. stores, including its first retail store in Echo Park. The others are the 3rd Street Promenade store in Santa Monica; Fashion Valley Mall in San Diego, as well as stores in Santa Clara; Norwalk, Connecticut; Jersey City at the Newport Mall; Bridgeport Village in Tigard, Oregon; and Madison, Wisconsin. The stores are expected to close Jan. 30.
The Los Angeles-based retail chain, which operates 230 stores worldwide, cited being unable to negotiate an “acceptable lease extension, ” high rents or an inability to turnaround sales slumps in November and early December as reasons for the additional closures.
Li'l Sebastian