American Apparel Fights For Its Life
Popular retail chain American Apparel filed for Chapter 11 bankruptcy protection Monday. The “sweatshop-free” company, which is based in Downtown Los Angeles and provides over 9,000 jobs throughout the world, hopes the filing will relieve its debt from $300 million to $135 million or less.
”This reorganization will enable the company to implement a comprehensive transformation strategy to revitalize the business and brand, while keeping its production and operations in the U.S.,'' the company said in a statement.
The critical money troubles are a result of a list of internal discrepancies in the company, according California Fashion Association president Ilse Metchek.
“[The economic climate] has nothing to do with it. This is the internal wrangling of an outgoing CEO, the incoming board, stockholders—it’s a follow-the-money situation,” Metchek said.
Last year, the company board fired its founder and CEO Dov Charney after they found evidence that he had been misusing funds and engaging inappropriately with employees.
Click here for a brief radio piece featuring CFA president Metchek.
Former store manager and company model Miranda Aponte believes Charney’s leadership may have contributed to the company’s decline. “When it came to him visiting the stores and stuff, he’d be worried about the superficial things rather than what really makes a business work,” she said.
She explained that the company’s internal decision-making was oftentimes questionable. “It was never very professional—the way they hire people, the way they run the business in general—to me, it never felt like it was based on merit.”
If the revitalization efforts fail, Metchek says the LA garment district will be hit hard by the impact. She says 6,000 professionals in LA alone will lose their job.
“Not too many large companies have a manufacturing set-up the way American Apparel does,” Metchek said.
While American Apparel works to regain its glory, the 227 retail stores around the globe will remain in operation.
