American Apparel and five affiliated debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware.
According to documents filed with the court, the primary objective in filing these cases was to consummate a sale of the business or some or all of their assets to Gildan Activewear SRL, the stalking horse.
To achieve this goal, the debtors are seeking immediate access to a proposed $30 million debtor-in-possession super-priority financing facility. Encina Business Credit will serve as administrative and collateral agent under the revolving credit facility.
Court-filed documents stated that the proposed post-petition financing will provide the capital necessary to continue operating without material disruption to the businesses during the chapter 11 cases for the period pending the sale, all in an effort to maximize the value of their estates for the benefit of creditors.
American Apparel emerged from a previous Chapter 11 filing in February 2016.