American Apparel To Liquidate Nine Stores Ahead Of January Auction

Image courtesy of Michael Kalus

Two weeks after American Apparel confirmed it could lay off 3,500 workers as part of its second bankruptcy go-around in two years, the company received approval to liquidate nine stores by the end of the month. 

The Wall Street Journal reports that U.S. Bankruptcy court judge Brendan Shannon approved the liquidation of the nine stores giving the company permission to begin “going out of business” sales for the next two weeks.

American Apparel estimates that the liquidation sales will generate about $600,000 in income for the company, and the location closures will save about $200,000 a month in rent.

Affected stores are located in New York, Washington, D.C., Seattle, Atlanta, Dallas, Memphis, Santa Cruz, CA, Evanston, IL, and Burlington, VT.

The remainder of the company’s stores – about 100 – will be sold at auction on Jan. 9.

Canadian company Glidan Activewear is thought to be the top contender for American Apparel’s intellectual property rights and some other assets. However, with the auction looming it’s possible other companies will swoop in to buy what’s left of the retailer.

Stores that aren’t sold on Jan. 9 will be liquidated by the same liquidators, Merchant Resources LLC and Gordon Brothers Retail Partners LLC, by April 30, 2017, the WSJ reports.

American Apparel began its second bankruptcy proceeding in two years in November. The company had previously filed Chapter 11 in October 2015.

The company ousted its controversial CEO Dov Charney in 2014, amidst a cloud of sexual harassment allegations and generally being a jerk. He tried to buy the company back in January, after it filed for bankruptcy.

The company board, however, rejected that offer, and the judge in charge of the proceedings chose American Apparel’s own restructuring plan as the one to follow.

That plan, however, has proven insufficient. In August, the company was considering moving manufacturing out of California to save money; by September, the new CEO was also out the door.

Shortly after filing for Chapter 11 for the second time, the company announced earlier this month that more than 3,500 workers would likely be out of a job by the end of January.

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