American Apparel Might Really Go Bankrupt This Time

American Apparel is in some serious trouble -- and that's aside from the various sexual harassment lawsuits filed against CEO Dov Charney.

Women's Wear Daily writes that the company is running out of money, reporting a net loss of $86.3 million, with only $5.3 million in the bank (we're rounding off here). And the label owes about $143 million to different lenders and facilities, if we're doing the math correctly. Charney and co. have until April 30 to prove that they will be able to ultimately pay back the money they owe.

Howard Davidowitz, chairman of New York-based Davidowitz & Associates, told the fashion newspaper, "Without an additional injection of cash, the company is done. Somebody has to write a check." But Charney dispelled any bankruptcy filing rumors, saying, "In my opinion, there's no chance of that. That's not an option we are going to explore. We have a variety of options. We could do a private placement of stock. Or we could use the resources we have. We do $10 million a week in sales."

However, last week the Associated Press wrote, "Troubled clothing chain American Apparel Inc., losing money and faced with a cash crunch, says it may have to file for Chapter 11 bankruptcy protection," so someone, maybe not Charney, necessarily (tied up in court with former employees much?) considers bankruptcy to be an option.

The AP adds:

The New York company warned in a filing with the Securities and Exchange Commission Thursday that it "may need to voluntarily seek protection under Chapter 11 of the U.S. Bankruptcy Code" if it can't improve its sales or cash position or find other sources of financing to keep it afloat.

The retailer known for its sexually provocative advertising also indicated that even if it does file for bankruptcy, it may be forced to liquidate if it can't put together a reorganization plan or find bankruptcy financing.

Meanwhile, it's business as usual in stores, Fashionista reports. On Monday, American Apparel launched a new denim line after developing the $80 duds for a year. Charney said in a press release, "Jeans are an iconic, essential part of the modern wardrobe, just like the t-shirt. No one does basics like American Apparel. We've mastered the basic t-shirt, now we're getting excited about jeans."

At least there's something to be excited about.

Comments

[Konrad Klean]

01:51 PM on 04/10/2011

Maybe if Dov kept his hands out of the cookie jar their weekly sales would be at $20 million. Who knows, I imagine most of the news savvy women have found substitutes after the first round of the sexual harassment suits.

Not to say Cherney is guilty in the recent one.

[Nybklyny]

05:38 PM on 04/05/2011

Now where are we going to buy overpriced T's that fall apart after one wash?

[Max Shaw]

02:09 PM on 04/05/2011

So does this mean my screen will stop being bombarded with soft core p0rn ads when I come on HP? That would be just fantastic..The whole company is disgusting.

[Calculator]

12:34 PM on 04/05/2011

I love American Apparel. They're one of the only clothing vendors that make clothes for people that fit me.

I will gladly pay extra for clothes that fit. Oh, and it's made in America.

[Aitch5]

12:29 PM on 04/05/2011

AA is suffering from really bad PR right now. Charney needs to be replaced, scrap their infamous ad campaign ----which is a total reflection of Charney's "taste" and aesthetic. And then improve the quality of the clothes.

Also, as others have already mentioned, I am a big believer in USA become a nation of manufacturing again, not just a nation of consumers: Howz about other American companies paying seamstresses a decent wage right here in the USA. I'm sick of seeing all my clothes with tags "made in China, Thailand, Vietnam, Mexico"--at slave wages so the fashion CEOs can be richer than they already are.

[SaySomething]

11:43 AM on 04/05/2011

Though it's made in America, I hope they do leave the scene. Their clothes are cheap and overpriced and their ad campaigns and the legal actions surrounding the founder reek of sleaze.

[Max Shaw]

02:09 PM on 04/05/2011

Agreed.

[ABACADABRA RABBIT]

11:03 PM on 05/19/2011

x2

[styledelights]

12:08 AM on 04/05/2011

I support and love the Made in America idea, but their style is little too trashy and quality is not good enough for the price. Hopefully they will make it, because even though I am not their demographic shopper, I feel made in USA is great for our country!
http://www.style-delights.blogspot.com/

[ccastillo]

11:22 PM on 04/04/2011

American Apparel clothing is too expensive for its "rag" like quality....

[bluguy8]

09:12 PM on 04/04/2011

Made in USA is a great idea . But stop the basics . You can make styles in this country . Other people do .

[dididangerlove]

08:29 PM on 04/04/2011

They did a great job with basic T-shirts but the last time I shopped their store, the stuff just looked trashy and tired.

[FPhoebe]

08:18 PM on 04/04/2011

I like the clothes, but the advertising is horrible. I mean, maybe for a little while to get some sort of buzz you have provocative ads. But any good businessman knows you can't keep doing the same thing over and over, you have to reinvent yourself constantly to keep people interested. And when people complain as much as they do about the ads, you know you really should be changing something. Dov Charney is not a good businessman, he's a h0rny toad and somebody with some astute business sense needs to take the reins of the company. There's potential in American Apparel, but nobody is tapping into it.

[MissIndependentLady]

07:24 PM on 04/04/2011

I hope it does go bankrupt. The CEO & the clothes are equally atrocious.

[Tomass De]

11:49 PM on 04/04/2011

AMEN

[Rafael De La Torre]

12:29 PM on 04/05/2011

You obviously have not seen the leaked photos of these so called in-house models American Apparel following a lawsuit. Here is a hint, Running around completely drunk and posing completely nude, with porn like quality. unprofessional and the photos speak for themselves.

Should the company go under? Never cared for it.
But to Blame the CEO only. Biased.