American Apparel Files For Bankruptcy But What Does It Mean?

American Apparel files for US bankruptcy protection after stock value fell 87 per cent

The US retail chain American Apparel has filed for US bankruptcy protection, a culmination of what has been a turbulent few years for the company.

Last year alone, the brand’s stock value fell by 87 per cent and it reported a $19.4 million (£12.8 million) loss in the second quarter of 2014.

There are no plans to close any of the stores or US manufacturing operations as the company, which hasn't turned a profit since 2009, undergoes a “brand restructure” that aims to cut its debt from $300 million to $135 million.

According to chief executive Paula Schneider: ‘This restructuring will enable American Apparel to become a stronger, more vibrant company.’

American Apparel, which runs 18 stores here in the UK, is no stranger to controversy. Its risqué adverts featuring nearly and sometimes naked models have been banned in the US for reportedly “sexualising” children. The Los Angeles-based company has also been involved in a lengthy legal battle with former CEO and founder Dov Charney, who was ousted in 2014 after numerous employee complaints and accusations of misuse of company funds.