Raunchy Street Label American Apparel Files For Voluntary Bankruptcy

Raunchy Street Label American Apparel Files For Voluntary Bankruptcy

A tough 12 months just got even tougher for edgy street wear brand American Apparel after it filed for voluntary bankruptcy.

The brand employs 9000 people globally and has stores in Sydney, Melbourne and Adelaide.

The filing was announced on the company website and includes a deal with lenders to reduce debt and revitalise the brand over the next six months.

It is believed new players such as H&M, Zara and Uniqlo have taken a huge bite out of American Apparel’s youth markets worldwide.

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No stranger to controversy, the brand’s marketing has often strayed into teen raunch, featuring young models in various states of undress and provocative poses.

In mid 2014, eccentric founder and CEO, Dov Charney, was fired amid allegations of sexual harassment and claims he wanted to make one employee his “sex slave”. It has also been claimed Charney regularly dropped his trousers around the company’s LA headquarters and was known to conduct meetings with only a sock covering his privates.

It has also been revealed that under Charney potential employees had to be subjected to full body photographs and exacting standards for employee grooming.

In late 2014, Paula Schneider was appointed CEO promising to clean up the brand’s hyper sexual marketing and financial accountability. In July, Schneider announced job cuts and the closure of underperforming stores.

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The New York Times has reported that the decision to file for bankruptcy is expected to give the company “breathing room” to get things in order without the threat of lawsuits and interest payments.

Schneider said of the decision to file for bankruptcy: “Our debt load simply wasn’t sustainable. You can’t do a turnaround plan without cash.

“Every day, we would make choices on what we were going to buy, even though we needed more for everyone. Every day, I have to pick between what I’m buying for retail or wholesale, or giving e-commerce enough money to develop a mobile app.”




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