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.