American Apparel Inc. is preparing for its second bankruptcy filing in as many years, capping a tumultuous stretch that included tumbling sales, red ink and a split with controversial founder Dov Charney, Bloomberg News reported today. The filing may come as soon as the next few weeks, and could help set the stage for a sale of the Los Angeles-based company by letting it exit leases and shutter part of the retail operation. Still, the plan isn’t yet final and could change as the holiday season approaches. The clothing maker only emerged from bankruptcy in February, when former bondholders — led by Monarch Alternative Capital — took over the company. A turnaround plan to return to American Apparel’s roots and focus on basic items like T-shirts and skirts didn’t improve results enough. The company also has hired restructuring firm Berkeley Research Group for guidance. Read more.
Read more about the trend of large distressed retailers liquidating rather than reorganizing in “Why Are U.S. Retail Reorganizations So Hard?” in the October ABI Journal.