American Apparel, the once hip and cool fashion brand, filed for bankruptcy protection on Monday. The retailer made its decision due to insanely huge debts, an overwhelming decrease in sales, employee strikes and the ?legal battle? with American Apparel?s ousted founder, Dov Charney, according to New York Times.
The bankruptcy protection, which was filed in the federal bankruptcy court in Delaware, was made with majority 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,? shared by New York Times.
This decision would allow American Apparel to still be able to manufacture in 131 stores in the United States open, according to the company. Paula Schneider, a retail executive who was hired last year to help the company in their operations, is planned to stay as chief executive ?through the bankruptcy proceedings,? posted by New York Times.
?Our debt load simply wasn?t sustainable. You can?t do a turnaround plan without cash,? Schneider said in an interview according to the New York Times. ?Every day, we would make choices on what we were going to buy, even though we needed more for everyone. Every day, I have to pick between what I?m buying for retail or wholesale, or giving e-commerce enough money to develop a mobile app,? she added.
?And it was all to get to the point where we could make these massive interest payments, and nothing that was really moving the company forward,? Schneider said. ?Not having the nuisance lawsuits, not having this massive debt, these are all extremely important things for the company to thrive.?
As to keeping manufacturing jobs in the United States, Schneider said that the company is still committed to keeping it. Rumors about the retailer moving its factory jobs to El Salvador or Mexico were ?unfounded,? according to New York Times. ?We will continue to manufacture in America,? Schneider said. ?That?s what the brand is. That?s what it?s about.?