Canadian apparel company Gildan Activewear won the bankruptcy auction to acquire US clothing retailer American Apparel LLC with $88 million bid under the US Bankruptcy Court in Wilmington, Delaware.
Initially, companies Gildan and YS Garments doing business as Next Level Apparel were the two companies with the highest featured bids for the auction. Gildan started with a bid of $66 million submitted on November 2016. Back then, American was just filing for its second bankruptcy protection on the US court.
Gildan’s bid includes the acquisition of American Apparel’s brand name, manufacturing equipments, and several of its wholesale inventories. The inventories purchased from American Apparel will be acquired separately in order for a seamless transition of the goods to the Canadian company’s own brand of Activewear business.
“We are excited to be moving forward with this acquisition. The American Apparel brand will be a strong complementary addition to our growing brand portfolio. We see strong potential to grow American Apparel sales by leveraging our extensive print wear distribution networks in North America and internationally to drive further market share penetration in the fashion basics segment of these markets,” stated Gildan CEO and president, Glenn Chamandy.
The deal is awaiting court approval set scheduled for Thursday and expected to be completed by early February 2017.
Aside from Gildan and Next Level Apparel, other companies also expressed interest on American apparel’s bankruptcy auction last November. E-commerce company Amazon.com Inc., apparel retailer Forever21, and brand licensor Authentic Brands Group all interest plans to bid during the auction but eventually did not submit any bids.
American Apparel has mentioned the previous month its plans to close nine of its stores including the ones located in Tribeca and Washington DC’s Georgetown. The US-based company also released memos to around 3,500 of their California-based headquarters noting the possibility to be laid off due to the company’s current financial state.
In November, American Apparel has sought and filed for a second bankruptcy protection less than a year from its first bankruptcy in October 2015 filing, due to continuous decline in sales growth of the company.
American Apparel has $170 million in debt after the company failed to comply with the turnaround plan assigned from the company’s owners and group of former bondholders. Gildan has already expressed then its plans for asset purchase from the American brand.
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