American Apparel files for bankruptcy

New York

AMERICAN Apparel, the one-time arbiter of edgy made-in-America cool, filed for bankruptcy protection on Monday, its business crippled by huge debts, a precipitous fall in sales, employee strife and a drawn-out legal battle with the retailer's ousted founder, Dov Charney.

The Chapter 11 petition, approved by the board, was filed in federal bankruptcy court in Delaware. The filing followed a deal struck with most of American Apparel's secured lenders to reduce the retailer's debt through a process known as a debt-for-equity conversion, where bondholders swap their debt for shares in the company.

The deal, which also includes extra financing from the participating bondholders, would enable American Apparel to keep its manufacturing operations in Los Angeles and its 130 stores in the US open, the company said. No layoffs were announced in the filing, which still requires approval by the bankruptcy court. The retailer's overseas operations are u…