Gildan Takes Over American Apparel
And today it finally happened. This morning Los Angeles-based American Apparel announced that it has filed for Chapter 11 bankruptcy for the second time in 13 months.
And today it finally happened. This morning Los Angeles-based American Apparel announced that it has filed for Chapter 11 bankruptcy for the second time in 13 months. From the depths of despair of one company comes a golden opportunity for another. Montreal-based Gildan Activewear has reportedly dropped $66 million to purchase American Apparel’s intellectual property rights and assets. But, that’s just the beginning.
According to Forbes, Gildan Activewear announced the acquisition to its employees this morning.
Forbes also reported that Authentic Brands and Sequential Brands were in talks with American Apparel over a sale as well. For Gildan, the situation looks like less of a simple acquisition of a company and more of a golden goose opportunity. Within their letter, Gildan Activewear noted that with American Apparel’s bankruptcy filing, the company is not shutting its doors to other interested parties. As the interest in American Apparel remains high, Gildan is planning to have an auction process for any other company to propose a better offer and, in short, Gildan will cash in on the acceptance of any competing offers. Gildan is expected to finalize the acquisition during the first quarter of 2017. Also sweetening the pot, is the fact that American Apparel’s bankruptcy filing allows for the auctioning of storefront locations as well.
In a letter to employees published in The Wall Street Journal,chairman of American Apparel’s board of directors, Bradley Scher said, “We’re confident that this decision is the best strategic move forward, in order to preserve the legacy of the American Apparel brand.”
However, the comments of Mark Weinstein, American Apparel’s chief restructuring officer, definitely should not give any long-term confidence for those employed by the company. In the court filing, he attributed market conditions to the initial bankruptcy filing, but admitted that the company’s turnaround strategy “completely failed.”
“The company faced unfavorable market conditions that were more persistent and widespread than the debtors anticipated,” Weinstein said, according to USA Today. “These market conditions were particularly detrimental to retailers.”
Forbes confirmed that Gildan Activewear plans to keep American Apparel’s manufacturing operation located in Los Angeles.