American Apparel files for bankruptcy in US

American Apparel, which announced last week that its UK business was going into administration, has filed for bankruptcy in the US for the second time in just over a year.

The group voluntarily filed for Chapter 11 bankruptcy protection and will continue to trade as it negotiates a possible sale of its assets to Canadian clothes manufacturer Gildan Activewear.

Gildan said on Monday that it has entered into an agreement to buy the worldwide intellectual property rights to the American Apparel brand and certain assets from the fashion company for around $66m in cash.

Gildan will also separately purchase inventory from American Apparel to ensure a seamless supply of goods in the printwear channel as it integrates the brand within its Printwear business.

However, Gildan will not be purchasing any retail store assets.

The closing of the transaction is subject to approvals by the American Apparel bankruptcy process and customary conditions, and is expected to occur in the first quarter of next year.

Gildan said: “The American Apparel brand is a highly recognised brand among consumers and within the North American printwear channel. The American Apparel brand would represent a strong complementary addition to the company's portfolio of brands.

“The acquisition will create revenue growth opportunities by leveraging Gildan's extensive distribution network in North American and international printwear markets to further increase the brand's penetration in the faster growing fashion basics segments of these markets. In addition, with American Apparel's strong heritage as a consumer brand, the company will evaluate potential wholesale opportunities for leveraging the brand within its Branded Apparel business.”