• Home
  • News
  • Business
  • American Apparel gets unanimous vote of approval for its reorganisation plan

American Apparel gets unanimous vote of approval for its reorganisation plan

By Angela Gonzalez-Rodriguez

loading...

Scroll down to read more

Business

American Apparel, Inc. has proudly announced that it has obtained unanimous approval of all voting classes to accept its reorganisation plan. This is undoubtedly a significant step forward, as it will enable the company to keep on implementing its current turnaround strategy under the existing leadership team.

The company and its five affiliated debtors have managed to agree for once on the on the key terms of an amended plan of reorganisation (the "Amended Plan").

The plan includes a commitment for an additional 40 million dollars of capital, through an asset-based credit facility from a third party lender or the Committee of Lead Lenders.

Paula Schneider, American Apparel's Chief Executive Officer, said in this regard: "This is an important step forward in emerging from our restructuring process as a stronger, more vibrant company. We are gratified to have reached this agreement with our Creditors' Committee and to have achieved this consensus from our unsecured creditors, and we would like to thank them for their support. We remain focused on executing our turnaround plan, and positioning American Apparel for the future by creating new and relevant products, launching new design and merchandising initiatives, growing our e-commerce business, and creating exciting and creative marketi ng campaigns to share the story of our progress."

American Apparel manages to find an agreement on reorganisation

This agreement in principle will result in the filing of an Amended Plan containing, among other things, the following key terms:

- Unsecured creditors will receive their pro rata share of 2.5 million dollars, a 150 percent increase from the payment that was provided for in the prior chapter 11 plan, which will be available to all unsecured creditors, regardless of whether any class of such creditors accepts or rejects the Amended Plan;

- The holders of the company's senior secured notes have agreed to waive their rights to receive this cash distribution on account of their unsecured deficiency claims, thereby significantly increasing recoveries to general unsecured creditors by approximately 30 times; and

- The funding of the litigation trust established for the benefit of unsecured creditors will be increased to 500,000 dollars, enabling the trust to investigate and pursue potential claims to increase recoveries to unsecured creditors.

- It will be a condition to the effectiveness of the Amended Plan that American Apparel obtain the foregoing commitment for 40 million dollars of additional exit capital, which is in addition to the 40 million dollars of new capital previously committed by the Committee of Lead Lenders.

- 2016 indicate that all impaired classes of claims voted to accept the prior plan (these results are subject to ongoing audit and are not official until the filing of the voting agent's tabulation declaration).

American Apparel