American Apparel Considering Bankruptcy

Published by: Frank Galvano on 1st Apr 2011 | View all blogs by Frank Galvano
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American Apparel Considering Bankruptcy

American Apparel Inc., the Los Angeles, California-based clothing company that has been called a classic American success story, announced on Friday it is considering filing for bankruptcy protection after being devastated in recent months by dwindling sales and productivity.

“We are currently experiencing significant liquidity constraints,” the company said in a statement.  The company had reportedly almost doubled sales from 2007 to 2009 before immigration-related staff firings and store over-expansions cut into the clothier's revenue.  Known for its colorful t-shirts and entertaining ads featuring scantily dressed women, the company has now filed a loss for four straight quarters, and has amended its loan agreements at leas five times to avoid defaulting on outstanding debt.

Shares of American Apparel dipped as much as 17 cents after the report, and have now declined 42 percent for the year.  The stock that once traded at close to $16.00 a share in now less than $1.00.

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