July 19, 2025 #1 Local News, Information and Event Source for the Century City/Westwood areas.

American Apparel Emerges From Chapter 11 Reorganization

American Apparel
Last month, American Apparel rejected a $300 million takeover bid from investors who supported the return of ousted founder and CEO Dov Charney (Thinkstock).

Los Angeles-based American Apparel announced today that it has emerged from Chapter 11 bankruptcy protection as a private company after successfully implementing a reorganization plan.

A Delaware bankruptcy court approved the plan Jan. 27.

American Apparel’s restructuring converts about $230 million of bonds into equity. It also provides $40 million of added capital and a commitment for a $40 million asset-backed loan.

That funding will be vital in supporting the firm’s turnaround plan, which additionally will be aided by a $20 million decrease in interest owed to creditors made possible by the reorganization.

An integral aspect of the approved deal was American Apparel’s switch from a public corporation to a private limited liability company, requiring a name change to American Apparel, LLC.

“I’m pleased to announce that our plan of reorganization … has now enabled us to emerge from bankruptcy in just a few short months,” CEO Paula Schneider said. “This is the start of a new day at American Apparel. With the enormous debt burden removed, we can now turn our full attention to our strategic turnaround.”

Last month, American Apparel rejected a $300 million takeover bid from investors who supported the return of ousted founder and CEO Dov Charney.

When the plan was approved, Charney said he was “disappointed” by the reorganization proposal.

“This outcome is one that I have been working tirelessly for nearly two years to avoid in an effort to protect value for the company’s various stakeholders,” Charney said.

“Now all stockholders will have their shares and value extinguished. Many of the company’s loyal vendors will recover only cents on the dollar of what the company owes them,” Charney said. “And the company’s workers, faced with current management’s inability to generate profits, face a highly uncertain future.”

Charney said he remained proud of his attempt to keep American manufacturing in the U.S. since relocating the company to Los Angeles in the late 1990’s from South Carolina.

According to Charney, the “sad reality” is that American Apparel — which he called the largest garment manufacturer in the United States — “will not survive at this pace and I don’t believe the current management has the talent to bring it back to health.”

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