American Apparel files for bankruptcy

But layoffs were not included in the filing, which awaits approval by the bankruptcy court. Business of Fashion reported that American Apparel has also experienced five consecutive years of negative profits, beginning in 2010, which totaled $338 million. The agreement would provide the company with access to financing during and after its restructuring. American Apparel has filed for Chapter 11 bankruptcy protection almost a year after the ousting of founder and CEO Dov Charney. American Apparel said that as the part of the agreement, American Apparel's secured lenders will give around $90 million in debtor-in-possession financing, and have promised $70 million of new capital.

The retailer is known for making its source materials and final products in America; its factories and headquarters are based in Los Angeles. To a few extent, the company is synonymous with its founder and former chief executive, Dov Charney, who cultivated a bad-boy image, championed salacious marketing and was cited in several sexual-harassment suits by former employees before his ouster past year. (The company is the largest apparel manufacturer in North American.)

The retailer's overseas operations are unaffected by the restructuring. He undertook efforts to take control of the company following his firing by the board back in 2014 amidst an investigation over what American Apparel called alleged workplace misconduct. The New York Stock Exchange warned last month American Apparel was at risk of being delisted, saying its financial condition had become so impaired that it was questionable whether the retailer could stay in business.

All told, American Apparel had approximately 9,000 employees and operates 227 stores in 19 countries. As for what this immediately means for the brand, 130 brick and mortar stores will remain in the United States and manufacturing operations will continue in Los Angeles. But experts say it was only a matter of time before the retailer would have to seek bankruptcy relief - an avenue that would, at least temporarily, halt all of the legal actions pending against the firm.