Now that American Apparel has been sold off to Canadian-based apparel maker Gildan Activewear, not only could all 110 stores reportedly be closing, but the retailer’s new owner has also decided not to buy some of its manufacturing operations after all, insiders say, prompting the start of layoffs for thousands of workers in Southern California.

Those ever-mysterious “people familiar with the matter” tell Reuters that although Gildan previously said it would possibly take over some of American Apparel’s manufacturing operations, after winning rights to the brand for $88 million, it changed its mind.

This means that many of the 2,166 employees at the company’s headquarters in Los Angeles and 959 employees at a nearby manufacturing facility could lose their jobs, the insiders said.

This is not entirely unexpected, as American Apparel points out in a statement that it issued a WARN Act notice “several months ago, letting employees know that depending on the buyer of the business, a sale could result in eventual shrinkage of some business areas.”

There’s some good news for some employees, however, as American Apparel says it secured a separate agreement with a textile manufacturer called Broncs, which plans to save more than 300 jobs eventually.

Gildan had said it would likely liquidate all stores if it won the bankruptcy auction. The Los Angeles Times reports that all stores will be shut down by April.

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