Top 40 supplier American Apparel (asi/35297) is preparing to file for bankruptcy again, according to multiple reports. The Los Angeles-based company has reportedly been exploring a sale (including the hiring of global investment bank Houlihan Lokey in August), and a filing could facilitate such a transaction. The move would allow the potential buyer to exit leases and shutter part of American Apparel’s retail operation, which includes about 200 stores, Bloomberg reported.
Authentic Brands Group LLC (owner of nearly 30 brands, including Aeropostale, Juicy Couture and more) and Iconix Brand Group Inc. (which owns London Fog, Ed Hardy, Mossimo and others) are among several companies that have expressed interest in acquiring American Apparel, according to Reuters.
A company spokeswoman declined to comment to Counselor. The reports come one month after Paula Schneider resigned as CEO of the company. The executive, who joined American Apparel as CEO in January 2015 (replacing company founder Dov Charney) was recently named CEO of apparel maker DG Premium Brands, which owns fashion brands such as 7 For All Mankind and Ella Moss. At the Fortune Most Powerful Women Summit from October 17-19, Schneider recounted her experience of working at American Apparel, including receiving death threats and watching a piñata with her likeness get beaten in American Apparel’s parking lot.
“I do think this was an extremely challenging turnaround from day one,” said Schneider, responding to a question about women often being forced to take jobs at difficult situations. “And I think specifically [at American Apparel], this board was looking for a woman who could be the antacid to the acid. … If you know you’re stepping into a turnaround, and a lot of the times those are the jobs that get offered, to be the CEO of turnarounds, you’re not going to win every one. You’re not. But in general, you still have to give it your best shot.”
American Apparel tapped Chelsea Grayson, the company’s general counsel and chief administrative officer, as Schneider’s replacement.
Last October, American Apparel filed for Chapter 11 bankruptcy protection and received court approval for a restructuring plan as Charney tried to win back control of the company, making an unsuccessful bid to the tune of $300 million in January. American Apparel emerged from bankruptcy in February, becoming a private company in the process. The supplier converted approximately $230 million in debt into equity to receive $40 million in exit capital and access to a $40 million loan.
In February, American Apparel announced it was shuttering a dyeing facility in Hawthorne, CA. On Monday, October 31, AST Sportswear Inc. (asi/30244) announced it had acquired the dyeing facility. The owner of the made-in-America apparel brand Bayside, AST plans to create more than 120 new manufacturing jobs as a result of the acquisition and will resume operations at the facility starting early 2017.
“The purchase of the Hawthorne Dyeing & Finishing Plant is an imperative addition to AST Sportswear Inc.’s production capacity,” said Abdul Rashid, COO of Anaheim, CA-based AST Sportswear. “While AST Sportswear Inc. already operates knitting, cutting and sewing operations, this procurement will further reduce our reliance on contract dye facilities. This will allow us to expand our product offering, streamline our supply chain, lower costs and ensure better quality control.”