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Annenberg School of Communication and Journalism University of Southern California
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American Apparel Files For Bankruptcy

Union members are upset about potential layoffs.

Angry labor union members protested in front of the American Apparel factory and store in Echo Park after the company filed for Chapter 11 bankruptcy. 

They were there to show support to workers and their rights. General Brotherhood of Workers of American Apparel President Stephanie Padilhado believes that the filing is a strategic ploy by high executives that robs thousands of people their jobs as workers are laid off.

The company has been run by CEO Paula Schneider since founder and ex-CEO Dov Charney was famously ousted from his post as rumors swirled around his misconduct in the workplace. He allegedly allowed another employee to post nude photos of a former employee, who sued him in 2011 for forcing her into sexual acts. He had also been reported to have made offensive remarks and gestures toward employees in the office.

The filing comes after years of speculation that the company is bankrupt. It has been loyal to its business model of Made-In-The-US, which experts say weakened them in competition with cheaper alternatives like H&M and Forever 21. In 2011, the company warned the Securities and Exchange Commission that it might have to file for bankruptcy. In 2013, it was rumored that the company was having trouble making payments on previous loans and interest.

Although it has close to $200 million in assets, American Apparel has almost $400 million in debt. From 2009 to 2014, the company lost $300 million. The bankruptcy filing will allow the company to restructure in the United States. Schneider believes that it will be a positive step in reenergizing the company. In the court filing, the company says the plan will “preserve” the manufacturer and its jobs.

Contact Staff Reporter Chris Porter and Mengchen Liu here and .
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