Is American Apparel headed for bankruptcy again?

Los Angeles - About a year ago, American Apparel filed for bankruptcy due to internal issues and financial struggles. It seems that even after undergoing business strategy initiatives and new executive staff, the Los Angeles retailer is only doomed to repeat its past. According to Bloomberg, American Apparel Inc. seems to be preparing for its second bankruptcy filing.

The exact date for the bankruptcy filing was not disclosed, however it could come in the next upcoming weeks. As reported by the publication, the bankruptcy filing has not yet been confirmed by the retailer. FashionUnited has reached out to American Apparel on this matter, but so far the company has not responded to comment.

American Apparel prepares for second bankruptcy filing

The Los Angeles-based company only exited bankruptcy earlier this year in February. The elevated basics apparel brand emerged as a private company through its new restructured organization plan and was able to officially exit Chapter 11 bankruptcy. The retailer and manufacturer were deemed out of bankruptcy by the Delaware court on January 27. As part of a turnaround plan, the company converted 230 million dollars of bonds into equity in the company. “With the enormous debt burden removed, we can now turn our full attention to our strategic turnaround, which will benefit our customers, vendors, and employees,” said former chief executive officer Paula Schneider at the time.

Paula Schneider, who has now left her position at American Apparel, led the company out of bankruptcy originally emerging towards a new goal. She took over the role in January 2015 following founder Dov Charney’s termination. Earlier this month, it was announced that Schneider left her post at the fashion-forward company and took over the chief executive position for DG Premium Brands. Whether or not Schneider’s departure has to do with the company’s new bankruptcy filing remains to be seen.

American Apparel also hired investment bank Houlihan Lokey earlier this year as well, which showed that the company may be seeking buyers. According to Reuters, companies such as Authentic Brands Group LLC and Iconix Brand Group Inc. may be interested in buying American Apparel. “Negotiations could lead to American Apparel filing for bankruptcy for the second time in as many years,” Reuters reported. This could potentially be one of the reasons that the controversial brand is headed towards its second bankruptcy.

The retailer has undergone quite a few ups and downs this past year. If the brand is headed towards a second bankruptcy filing, it seems that the end of the “Made in USA” retailer may be near. With inconsistent business plans, frequent executive head changes, and financial struggles; only time can tell how the business will progress forward from here.

Photo: American Apparel