Witness the roller coaster ride of the American Apparel bankruptcy through the lens of ABF Journal illustrator Jerry Gonzalez.
American Apparel isn’t the only youth-oriented retailer that sought Chapter 11 protection in 2016, but its story is the most dramatic. Its first bankruptcy proceedings included a failed battle by ousted Founder and CEO Dov Charney to regain control. Six months after exiting Chapter 11, the company was back in bankruptcy with $30 million DIP financing from Encina Business Capital and a $66 million stalking horse bid from Canadian underwear manufacturer, Gildan. Is this American Apparel’s last stand?
Encina Business Credit provided a $30 million DIP facility to American Apparel. The financing, which has been approved by the bankruptcy court, will be used for working capital as the company operates under Chapter 11.
American Apparel filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, seeking approval of a proposed $30 million revolving DIP credit facility agented by Encina Business Credit.
American Apparel’s plan of reorganization has been confirmed by the Court. The company’s transformation strategy to revitalize the brand remains the key focus.
American Apparel reached a restructuring support agreement with 95% of its secured lenders to implement a pre-arranged financial restructuring. The company said its secured lenders will provide $90 million in DIP financing.
American Apparel secured a $90 million asset-based revolver with Wilmington Trust as agent for a lender group replacing Capital One Business Credit. The company noted “substantial doubt that it would be able to continue as a going concern.”
Bloomberg reported that American Apparel posted a wider Q2 loss in a preliminary earnings statement and may not be in compliance with certain provisions of its revolver with Capital One Financial.
Inc. released its list of six brands that may not make it through 2015. Included in the list is RadioShack, American Apparel and Sears Holdings.