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American Apparel Emerges From Chapter 11

February 08, 2016, 07:48 AM
Filed Under: Bankruptcy

American Apparel, LLC has emerged from chapter 11 as a private company after successfully implementing its plan of reorganization, approved by the Delaware bankruptcy court on January 27, 2016.

American Apparel's reorganization plan converted approximately $230 million of bonds into equity in the Company and provided for the infusion into the Company of $40 million of exit capital and a commitment for a $40 million asset-backed loan. These sources of incremental liquidity will serve as vital support to the Company's turnaround plan, and interest expense will decrease by $20 million as compared to the period before the Company's chapter 11 case. Under the reorganization plan, the Company also converted its corporate form from a Delaware corporation to a Delaware limited liability company and, therefore, is now known as American Apparel, LLC.

"I'm pleased to announce that our plan of reorganization, which was supported by our Unsecured Creditors' Committee and our bondholders, unanimously accepted by our voting creditors and confirmed by the Court, has now enabled us to emerge from bankruptcy in just a few short months. This is the start of a new day at American Apparel," said Chief Executive Officer Paula Schneider.

Schneider added: "With the enormous debt burden removed, we can now turn our full attention to our strategic turnaround, which will benefit our customers, vendors and employees. Our strategy will focus on: designing fresh products and merchandising; launching new partnerships to grow the e-commerce platform; unveiling progressive advertising and marketing campaigns; investing in brick-and-mortar retail locations in more promising areas; and implementing rigorous planning and forecasting for timely product deliveries and to streamline excess inventory."

American Apparel's legal advisor in connection with the restructuring was Jones Day. FTI Consulting served as its restructuring advisor and Moelis & Company served as its investment banker for the restructuring. Milbank, Tweed, Hadley & McCloy LLP was the legal advisor to the bondholders and Ducera Partners LLC served as restructuring advisor.

American Apparel has a toll-free reorganization hotline, accessible to U.S. callers at: +1 (877) 940-7795 and international callers at +1 (614) 779-0360. Customers, employees, or other interested parties who may have questions related to the reorganization may call this hotline for more information.

American Apparel, LLC (the "Company") is a vertically-integrated manufacturer, distributor, and retailer of branded fashion-basic apparel based in downtown Los Angeles, California. As of February 1, 2016, the Company had approximately 7,900 employees and operated 202 retail stores in 19 countries including the United States and Canada.

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