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Reports have American Apparel filing for bankruptcy again

A popular opinion amongst many in Salem may be that a company filing for bankruptcy is a sign of its impending failure. Bankruptcy protection, however, is not always meant to signal the end of an organization. In many cases, it may be the means by which it is saved. By reorganizing its liabilities as well as its corporate structure, a company can use bankruptcy as a tool to better itself. Yet sometimes it does not happen as smoothly as some would think. In certain cases, a second bankruptcy may be required to achieve the aims of a company’s stakeholders.

Such appears to be case with American Apparel, the clothing company that made headlines a few years ago thanks to its flamboyant yet controversial CEO. His ouster was followed by the company seeking bankruptcy protection in October 2015. An initial plan to cut its debts of over $300 million in half by offering equity to creditors, as well as acquiring an additional $90 million through a bankruptcy loan seems to have failed, as sources are stating that American Apparel is filing for bankruptcy again only a year later. The stated goal of this current move is to trim back some of the company’s retail locations and make it more attractive to sell based off of its brand resources alone.

Choosing to seek bankruptcy is a big decision for any company; imagine how much larger it may loom if one is having to consider to do it twice. However, if it proves to be the most effective way at continuing an organization’s operations, such a decision may prove to be the best course of action. Such a conclusion, however, may be much better supported if made with the assistance of an experienced bankruptcy attorney.

Source: Fortune “That Again? American Apparel is Reportedly About to Return to Bankruptcy” Mount, Ian, Oct. 27, 2016

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