Teen apparel retailer American Apparel has filed for chapter 11 bankruptcy protection. The company plans to restructure under the support agreement with most of its secured lenders.
The company says it will continue to operate all of its retail locations through the process, with all wholesale and US manufacturing operations continuing for the foreseeable future.
Executives at American Apparel hope to cut debt its to $135 million from $300 million. The restructuring will eliminate more than $200 million of bonds in exchange for equity in the reorganized company.
“By improving our financial footing, we will be able to refocus our business efforts on the execution of our turnaround strategy,” Chief Executive Paula Schneider said in a statement.
American Apparel’s secured lenders will provide about $90 million in debtor-in-possession financing.
The American-made clothing retailer has failed to turn a profit since 2009.
In August we reported that American Apparel said it didn’t have enough money to continue operations through the next 12 months.
The restructuring is expected to be completed within six months.
The case is in U.S. Bankruptcy Court, District of Delaware, Case No: 15-12055.