The California-based organization submitted for section 11 protection in Delaware today. As an element of a cope with loan providers, the business said it'll carry on operating its company "without interruption to consumers, employees and sellers" but it will close several of its shops away from U.S. The company features 227 retail locations in 19 countries, 130 which are in the U.S.
A spokeswoman for United states Apparel declined to comment, alternatively referring ABC Information to its bankruptcy document.
"This restructuring will allow US Apparel to become a more powerful, more radiant organization, " Paula Schneider, United states Apparel's CEO, said in a declaration. "By enhancing our economic ground, we are in a position to refocus our business efforts regarding the execution of your turnaround method as we look to create brand new and appropriate services and products, start brand-new design and merchandising initiatives, purchase brand new stores, develop our e-commerce company, and create captivating brand new marketing promotions which will help drive our company forward."
American Apparel's handle loan providers ended up being approved by its board.
Ronnie Moas of perspective analysis, an investment research company, stated tight competitors from other clothing retailers have actually put force on United states Apparel for many years.
"Zara, H&M and Forever 21 came in and ate this business live, " Moas informed ABC News. "there was clearly too much competitors and wage stress. It absolutely was survival associated with fittest."
Gary Friedman/Los Angeles Times/Getty Photos
Dov Charney, Senior Partner of American Apparel, is photographed in the factory in downtown Los Angeles, April 3, 2012.The clothing company's stock when traded at $15 a share in belated 2007, once the business ended up being appreciated at around $1 billion.
"[American attire] basically got killed during the recession as soon as the market crashed in addition they never restored from that, " Moas stated.
Although last straw for United states Apparel was the increasing price of litigation about founder Dov Charney. This past year, the company ousted Charney for alleged worker sexual harassment and misconduct. He later on sued the organization for defamation.
"The nail into the coffin had been the legal expenditures linked with the CEO, " Moas said. "It was these types of a distraction in addition they already had zero margin for error. They simply couldn’t produce cash utilizing the legal costs in addition."
Employees iron shirts at US Apparel factory in downtown l . a ., April 3, 2012.But Moas is reluctant to blame their president and management entirely for its downfall. Moas, just who stated he supports their objective to pay its employees a "living" wage, said he feels other programs that use cheap foreign work may also be to blame.
"frequently you aim the finger on organization with regards to goes to zero, "Moas noted. "inside specific instance, I’m pointing a finger at company additionally the US customer they performedn’t vote with their wallets that what these other companies do is certainly not ok."
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