AMERICAN APPAREL EMERGES FROM CHAPTER 11
American Apparel, LLC has emerged from chapter 11 as a private company after successfully implementing its plan of reorganization, which was approved by the Delaware bankruptcy court on January 27, 2016.
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.
“This is the start of a new day at American Apparel,” said CEO Paula Schneider. “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. Our strategy will focus on: designing fresh products and merchandising; launching new partnerships to grow the e-commerce platform; unveiling progressive advertising and marketing campaigns; investing in brick-and-mortar retail locations in more promising areas; and implementing rigorous planning and forecasting for timely product deliveries and to streamline excess inventory.”
