Gildan of Montreal pays $88M for insolvent American Apparel brand

Montreal-based apparel maker Gildan Activewear Inc. has won an auction to buy the assets of American Apparel, which went into a court-supervised liquidation process earlier this year.
Gildan has bought the brand name and some inventory of American Apparel, but not the chain of retail stores. (Keith Srakocic/Associated Press)

Montreal-based apparel maker Gildan Activewear Inc. has won an auction to buy the assets of American Apparel, which went into a court-supervised liquidation process earlier this year.

The transaction is subject to approval by a U.S. bankruptcy court on Thursday. If that goes through as expected, the deal will be finalized next month.

For $88 million US, Gildan is buying all intellectual property rights related to the American Apparel brand name, along with some manufacturing equipment at the clothes maker's factories.

No retail stores are included in the deal, and all current American Apparel stores are expected to close.

Gildan will, however, purchase inventory from American Apparel in a separate transaction "to ensure a seamless supply of goods to the printwear channel while the company integrates the brand within its printwear business," the company said in a release.

While once a ubiquitous brand name for young people due to its risqué advertisements and commitment to use non-sweatshop labour, American Apparel collapsed under its own massive debts earlier this year and has tried to restructure more than once.

American Apparel — now based in Los Angeles but originally founded in Montreal in 1989 — has filed for bankruptcy twice, in 2015 and again last year.

Gildan first emerged as a suitor for the company in November with a $66-million US stalking horse bid — a baseline bid that other companies would have to match.

While several other names, including Amazon and Forever 21, were reportedly interested in the brand, Gildan emerged the winner with a sweetened $88-million offer on Tuesday.

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.