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American Apparel Files for Bankruptcy–Again!

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American Apparel (f/k/a Endeavor Acquisition and Viva Radio) and five affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware.

The Company, which designs, manufactures, distributes, retails and sells branded fashion basic apparel products and clothing and accessories, is represented by Pachulski Stang Ziehl & Jones. American Apparel emerged from a previous Chapter 11 filing in February 2016.

According to documents filed with the Court, “[T]he Debtors’ primary objective in filing these Cases (as defined below) is to consummate a sale (the ‘Sale’) of their business or some or all of their assets to Gildan Activewear SRL (the ‘Stalking Horse’). To achieve this objective, the Debtors seek immediate access to the proposed $30 million debtor-in-possession super-priority financing facility.”

Court-filed documents continue, “This proposed postpetition financing will, among other things, provide the capital necessary to allow the Debtors to continue operating without material disruption to their 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….The Debtors’ domestic retail and wholesale operations will continue operating in the ordinary course until the closing of a Sale in order to preserve the value of the Debtors’ estates to ensure a value-maximizing transaction. However, the Debtors currently do not have sufficient cash to operate for more than a week. Therefore, absent entry into the DIP Credit Facility, the Debtors will have no alternative but to immediately cease operating and convert these Cases to cases under chapter 7.”

Encina Business Credit will serve as administrative and collateral agent under the $30 million revolving credit facility.

Read more retail bankruptcy news.

The post American Apparel Files for Bankruptcy–Again! appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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