Los Angeles – American Apparel is preparing for its second bankruptcy filing in as many years, according to people familiar with the situation, capping a tumultuous stretch that included tumbling sales, red ink and a split with controversial founder Dov Charney.
The filing may come as soon as the next few weeks, according to the people, who asked not to be identified because the discussions aren’t public. The move 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, according to the people. 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 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, according to the people. The company also has hired restructuring firm Berkeley Research Group for guidance, the people said.
Representatives for Monarch and Berkeley Research Group didn’t immediately respond to a request for comment, while American Apparel declined to comment.
