American Apparel emerges from bankruptcy

It’s the beginning of a new era at long-suffering American Apparel.



On Friday, the company announced it has emerged from Chapter 11 as a private company after successfully implementing its reorganization plan. The announcement comes days after the Delaware bankruptcy court gave its approval to the plan.



Under the approved plan, approximately $230 million in bonds was wiped out in exchange for equity in the reorganized company. The participating lenders include Monarch Alternative Capital, Coliseum Capital and Goldman Sachs Asset Management.



In addition, the chain’s new owners provided an infusion into the company of $40 million of exit capital and a commitment for a $40 million asset-backed loan. Annual interest expense will decrease by $20 million annually as compared to the period before the company's Chapter 11 case.



Also under the plan, American Apparel converted its corporate form from a Delaware corporation to a Delaware limited liability company known as American Apparel, LLC.



“With the enormous debt burden removed, we can now turn our full attention to our strategic turnaround, which will benefit our customers, vendors and employees,” said CEO Paula Schneider. “Our strategy will focus on: designing fresh products and merchandising; launching new partnerships to grow the e-commerce platform; unveiling progressive advertising and marketing campaigns; investing in brick-and-mortar retail locations in more promising areas; and implementing rigorous planning and forecasting for timely product deliveries and to streamline excess inventory."



As of February 1, 2016, American Apparel operated 202 retail stores in 19 countries including the United States and Canada. The company also operates a global e-commerce site and a wholesale business.