New Delaware Chapter 11 Filing – American Apparel LLC
American Apparel LLC and five of its subsidiaries have filed petitions for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 16-12551). As many may remember, American Apparel only emerged from bankruptcy earlier this year, on February 5, 2016 (Case No. 15-12055). According to the First Day Declaration, the Debtors have faced unexpectedly difficult market conditions since emerging from the prior Chapter 11 proceedings; they have seen sales drop by 32.7% and EBITDA decline by $40 million, while many of the Debtors’ restructuring initiatives have failed to have the impact expected. The Debtors explain that in July 2016, they engaged Houlihan Lokey Capital, Inc. to begin the solicitation of bids for the sale of all or a portion of the Debtors’ business. The Debtors received three official letters of intent, and now enter Chapter 11 with Gildan Activewear SRL as their proposed stalking horse in a sale of substantially all of the Debtors’ assets. The Debtors also enter Chapter 11 with $30 million in proposed Debtor-in-Possession financing. Encina Business Credit, LLC is the administrative and collateral agent to the proposed DIP Lenders. Prime Clerk is the proposed claims agent. The cases have been assigned to Chief Bankruptcy Judge Brendan L. Shannon.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.
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