American Apparel wins approval to exit bankruptcy

American Apparel logo

A U.S. bankruptcy judge on Monday approved the restructuring plan for retailer American Apparel, dashing former CEO Dov Charney’s hopes of regaining control of the company and giving the chain a fresh shot at building a sustainable business.

The company filed for Chapter 11 bankruptcy protection in October, citing a sharp decline in sales, a poor sense of fashion and legal battles over Charney’s alleged sexual misconduct.

A group of hedge funds, including Standard General and Monarch Capital, is set to take over the company after injecting capital immediately before and during the bankruptcy case.

“This is a new day for the company, and a positive outcome for our customers, vendors and employees,” American Apparel CEO Paula Schneider said in a statement. “With this milestone behind us, we are now fully focused on executing our turnaround strategy as we continue working to drive revenue across our wholesale, retail and e-commerce businesses.”

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