On February 5, 2016 American Apparel, LLC (the "Company"), a
manufacturer, distributor, and retailer of branded fashion-basic apparel,
announced that they have emerged from chapter 11 as a private company after
successfully implementing its plan of reorganization, approved by the Delaware
bankruptcy court on January 27, 2016.
The fashion industry understands that American
Apparel is more than just clothing stores. Before opening the stores, they
began as manufacturers with an extensive list of wholesale accounts. Today via
a newsletter they have informed their wholesale clients regarding the benefits
of their recent restructuring.
As mentioned above, American Apparel recently emerged from
its financial restructuring process. It is generally agreed that the completion
of this process is positive news for the company. With $230 million of
debt removed from the balance sheet, drastically reduced interest expenses, and
an injection of $80 million from their investors, they can now devote their
attention to implementing their turnaround plan and possibly achieving
operational excellence.
This means they can focus their energy on designing and
manufacturing of clothing.
By mid-March you will see several exciting new additions to
the organic and sublimation collections. Their demand planning process has been
upgraded to ensure that these new styles, and their iconic classics, will be in
stock and available for shipment to their wholesale customers.
Summary of American Apparel’s 2016 reorganization:
American Apparel's reorganization plan converted
approximately $230 million of bonds into equity in the Company and provided for
the infusion into the Company of $40 million of exit capital and a commitment
for a $40 million asset-backed loan. These sources of incremental liquidity will
serve as vital support to the Company's turnaround plan, and interest expense
will decrease by $20 million as compared to the period before the Company's
chapter 11 case. Under the reorganization plan, the Company also converted its
corporate form from a Delaware corporation to a Delaware limited liability
company and, therefore, is now known as American Apparel, LLC.
If you are tired of hearing about the reorganization and
prefer to shop for t-shirts & underwear, you are welcome to go shopping at the American Apparel
website.
Thank you for taking the time to read our apparel industry blog post. We hope that you have found this news to be informative. If you have comments or questions, please add your thoughts in the discussion area below.