The empire is crumbling. The once massively popular American Apparel filed for bankruptcy protection on Monday (Oct. 5), due to huge debts and slumping sales.
According to the New York Times, the Chapter 11 filing follows a deal struck with American Apparel’s secured lenders to reduce the retailer’s debt through a process known as a debt-for-equity conversion, where bondholders swap their debt for shares in the company.
The deal would enable American Apparel to keep its manufacturing operations in Los Angeles and its 130 stores in the United States open, the company said.
So far, no layoffs were announced, while American Apparel’s overseas operations remain unaffected by the restructuring.