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.
Contact Norman L. Pernick and Nicholas J. Brannick for more information.
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