American Apparel files for bankruptcy in the US

American Apparel had not made a profit since 2009

Clare Hutchison
Monday 05 October 2015 08:35 BST

American Apparel has capped a year of turmoil by filing for chapter 11 bankruptcy in the US.

The brand said it had the support of 95 per cent of its secured lenders for restructuring. However the company said that stores should stay open as usual and that manufacturing would continue.

American Apparel has made headlines in the past year for legal battles with its former boss and founder Dov Charney.

The bankruptcy filing, which had been anticipated by many in the industry, follows a chaotic period in the company's 26-year history.

It sacked Mr Charney as chief executive in December for alleged misconduct.

Charney has since fought back, launching several law suits against the company claiming defamation and breach of contract.

American Apparel had not made a profit since 2009.

The retailer said the restructuring will slash debt by $165 million (£108.4 million) to $135 million by eliminating $200 million in bonds in return for equity in the revamped company.

“By improving our financial footing, we will be able to refocus our business efforts on the execution of our turnaround strategy,” chief executive Paula Schneider said in a statement.

Some of American Apparel's adverts were banned by the Advertising Standards Authority in 2013 for being "overtly sexual" and "gratuitous", while another raised concerns about models being vulnerable.

Additional reporting by Reuters

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