Bankrupt American Apparel Turns To Same Hedge Fund That Helped RadioShack

At first glance, American Apparel and RadioShack don’t seem to have much in common: one uses provocative advertisements to sell leggings, T-shirts and other clothing items, while the other focuses more on the sale of wireless and electronic products. Unfortunately, the things the two companies do have in common aren’t so great: both have suffered through years of slumping sales that eventually led them to, separately, file for bankruptcy protection. And that means they could soon share a common hero in hedge fund Standard General. 

Reuters reports that just two days after American Apparel filed for bankruptcy, the company announced it would start a revamp of its struggling business by giving ownership to Standard General – the same investors that provided RadioShack with hundreds of millions of dollars during its own difficult time. 

The Los Angeles-based retailer says it will work with bondholders to continue operations, rather than simply auctioning off company assets for a cash infusion.

“American Apparel is in the early stages of an operating turnaround,” the company’s lawyer told a federal bankruptcy court during a hearing to approve $90 million in financing to pay bills and wages for its 8,500 employees.

Under the company’s plan with Standard General, it hopes to hire new talent, boost internet sales, rebuild the brand and give a fresh new look to products, Reuters reports.

American Apparel also plans to continue utilizing its California manufacturing base. A move it says could help get new product to stores before the holiday shopping season.

The retailer’s turnaround plan is the second in three months. Back in July, the company announced it would close some locations and create a new line of clothing as part of a $30 million cost-cutting turnaround effort.

American Apparel seeks fashion revival under bankruptcy plan [Reuters]

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