American Apparel has filed for Chapter 11 bankruptcy protection almost a year after the company ousted its controversial founder Dov Charney, over allegations of misconduct.
American Apparel, which has not made a profit since 2009, said that they have already reached agreements with creditors representing 95 percent of its secured debts to execute a restructuring plan. According to a statement from the Los Angeles-based company, the restructuring plan will still require a court’s approval, but if approved it will allow its stores and manufacturing operations to continue to operate normally.
American Apparel also said in the court filing that it plans to shed unprofitable stores, though it did not identify how many stores would close.
The retailer is currently being sued by ex-CEO Charney, who was fired in December following allegations that he had violated its sexual harassment policy. Charney denies those charges.
American Apparel, which flirted with bankruptcy as early as 2011, has about 8,500 employees at six factories and 230 stories in the U.S. and 17 countries, including 30 stores in Canada.
