American Apparel is filing for Chapter 11 bankruptcy after just exiting bankruptcy protection earlier this year.
According to a filing with the U.S. Bankruptcy Court for the District of Delaware on Monday, American Apparel has assets worth between $100 million and $500 million. The company has been searching for a buyer and one has already come forward to purchase some of its assets.
Gildan Activewear Inc (USA) (NYSE:GIL) is planning to purchase some assets from American Apparel during its bankruptcy auction for $66 million. This also includes the apparel retailer’s intellectual property rights connected to the brand. However, it won’t be purchasing any assets connected to the company’s retail locations.
Bradley Scher, Chairman of American Apparel, says that the company doesn’t expect the auction process to affect operations at any of its stores. Gildan Activewear Inc (USA)’s offer for some of the company’s assets will be the initial bid in the auction, reports Reuters.
Gildan Activewear Inc (USA) says that it will need approval from the American Apparel bankruptcy process and customary conditions before it can acquire parts of the company. It also says that it expects the transaction to close during the first quarter of 2017.
“Gildan will also separately purchase inventory from American Apparel to ensure a seamless supply of goods in the printwear channel while the Company integrates the brand within its Printwear business,” Gildan Activewear Inc (USA) said in a statement.
American Apparel first filed for Chapter 11 bankruptcy protection in October 2015. The move didn’t come as a surprise after the company announced it didn’t have funds to keep itself going for another year just a couple of months prior.
