by Brian Lipton

american apparelCanadian-based Gildan Activewear Inc. has entered into an asset purchase agreement to acquire the worldwide intellectual property rights related to the American Apparel brand and certain assets from American Apparel, LLC, a California-based manufacturer of fashion basics, which has once again filed for bankruptcy, for a cash purchase price of approximately $66 million.

Gildan has also announced that it will also separately purchase inventory from American Apparel to ensure a seamless supply of goods in the printwear channel while it integrates the brand within its printwear business. However, Gildan will not be purchasing any retail store assets for American Apparel. In addition, Gildan will evaluate potential wholesale opportunities for leveraging the brand within its branded apparel business.

American Apparel voluntarily filed for Chapter 11 bankruptcy protection on November 14, 2016 in Delaware, the second time the California-based company has done so in the past 13 months as it has struggled in the consumer market. American Apparel’s controversial founder Dov Charney was forced out in 2015 and was replaced as CEO by Paula Schneider, who recently left to head Delta Galil’s Premium Brands division.

Gildan acknowledges that the Bankruptcy Court may require American Apparel to hold an auction for its assets and business under which the proposed acquisition would constitute the initial bid. And that consummation of the acquisition would be subject to Gildan being selected as the successful bidder in any such auction and Bankruptcy Court approval. Gildan will be entitled to a break-up fee and certain expense reimbursements if it does not prevail as the successful bidder at any such auction.

Gildan’s current brands include Gold Toe, Peds and Anvil, and it has licensing agreements with New Balance and Under Armour among other companies.