Shares in clothing brand American Apparel (NYSEMKT:APP) have fallen over 6 percent this morning, after announcing that it will file for bankruptcy.
The LA-based company has been in trouble for months, after a suit of law suits surrounding its founder Dov Charney and warnings for sexualised advertisements.
In a statement, it said it had reached a restructuring support agreement with 95% of its secured lenders who will write off $200m of bonds in exchange for equity in the company. The deal also involves the company filing for Chapter 11 bankruptcy protection.
Paula Schneider, American Apparel’s Chief Executive Officer, commented:
“This restructuring will enable American Apparel to become a stronger, more vibrant company.
“This process will ultimately benefit our employees, suppliers, customers and valued partners. American Apparel is not only an iconic clothing brand but also the largest apparel manufacturer in North America, and we are taking this step to keep jobs in the U.S.A. and preserve the ideals for which the Company stands.”
American Apparel financial results have been disappointing over recent quarters, recorded a loss of $19.4m in the second quarter of this year. The company is currently trading down 6.34 percent at 0.112 pence per share. (0921GMT)
