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American Apparel Files For Bankruptcy Protection

What had seemed like a real success story hit a roadblock earlier this month. Homegrown clothing retailer and manufacturer, American Apparel, has filed for Chapter 11 bankruptcy. According to a Consumerist report, the company plans to cut its $300 million debt by almost $200 million in exchange for equity.

Founded in 1989 by Dov Charney, the vertically integrated company had a meteoric rise to popularity and success. What made the company unique is that all its manufacturing took place in the United States, as opposed to outsourcing it to a cheaper labor market like most companies do. This was done to make the company “sweatshop free” and avoid the conditions workers have to endure in many of those markets.

American Apparel has a modern business philosophy, using environmentally friendly materials and manufacturing processes while keeping prices competitive. American Apparel has championed causes like immigration reform and lesbian, gay, bisexual, and transgender (LGBT) issues. The company prides itself on being labor friendly. It provides perks like onsite massage therapists and free bicycles at its Downtown Los Angeles factory.

American Apparel states that it plans to restructure and become profitable again. Operating a business in a fluctuating economy is always a complicated and risky venture.  Many successful people have filed for bankruptcy at some time in their lives, including Henry Ford and Walt Disney. If you’re considering filing for bankruptcy for yourself or your business, you need to consult an experienced bankruptcy attorney.

The legal team at McFarlin, LLP has been representing Orange County clients for many years. Our goal is to get you out of debt and back on your feet as soon as possible. Call us today at (888) 728-0044 to schedule a free consultation.