American Apparel Files For Bankruptcy: What That Really Means

Should we say goodbye to American Apparel? The extremely overpriced retailer just filed for bankruptcy, coming as a surprise to nearly no one after store closings and the press release that was sent out in August stating that the company may not be able to stay in business for longer than a year. AA is $311 million in debt due to sales decline, employee dissatisfaction, lawsuits, and several issues with the company’s founder and former CEO Dov Charney.
The retailer has not turned a profit since 2009, and this is mainly due to the company being strictly based in America and refusing to manufacture clothes overseas, which is what the company takes pride in. This makes their clothing more expensive than competitors like H&M and Zara while also keeping them from being able to come out with the latest trends as quickly.
So what does this mean for American Apparel? For right now, all 130 stores will stay open in the United States, and they will continue to manufacture everything from Los Angeles. We will have to wait to see exactly what happens with AA if the bankruptcy is approved by courts. Most of the money will likely go to their employees lawsuits, which are for various issues like sexual harassment and labor complaints.


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