Business

Canada's Gildan Activewear bids to buy assets of bankrupt American Apparel

Canadian clothing manufacturer Gildan Activewear Inc. has offered $66 million for the rights to the American Apparel brand name after the latter company has filed for bankruptcy protection for the second time in as many years.

American Apparel, founded by Canadian Dov Charney, also filed for bankruptcy at this time last year

An American Apparel store logo is pictured on a building along the Lincoln Road Mall in Miami Beach in March of this year. (Carlo Allegri/Reuters)

Canadian clothing manufacturer Gildan Activewear Inc. has offered $66 million for the rights to the American Apparel brand name after the latter company has filed for bankruptcy protection for the second time in as many years.

Montreal-based Gildan has bought the rights to use the name and a limited supply of inventory from American Apparel, but will not be buying any of American Apparel's retail stores as part of the transaction.

Both companies can trace their origins to the city of Montreal, as Gildan was founded there in 1984, and American Apparel was founded there in 1989 before later moving its headquarters to the U.S.

American Apparel filed its first bankruptcy in October 2015 amid declining sales and an acrimonious legal fight with ex-CEO Dov Charney, who was booted from the company he founded partly due to allegations of impropriety with employees.

Those bankruptcy proceedings finished in February of this year, when the bondholders who now own the company quietly moved ahead with plans to sell the brand to recoup their losses.

The chain, known for its sexually suggestive advertising campaign, listed assets of between $100 million and $500 million US, and about the same amount of liabilities, according to bankruptcy court documents.

American is just the latest youth-oriented clothing line to come under intense financial pressure in recent years, as Áeropostale, Wet Seal LLC and Pacific Sunwear of California Inc, have filed for bankruptcy since the start of 2015

WIth files by Reuters News Agency

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.