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American Apparel Sued by Fabric Supplier Over Unpaid Bills

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The hits keep coming for American Apparel: The Los Angeles-based clothier made famous as much by its hipster aesthetic as its racy ad campaigns has been sued by a fabric supplier for late payments.

According to a report in the New York Post, The Knit House Corp. of Vernon, California, has filed a suit seeking nearly $81,000 of a $134,622 order.

The complaint alleges the struggling company—which last month said it doesn’t have enough cash to see it through the year—paid $53,666 of the bill but has since “refused” to pay the outstanding balance.

Sources close to the supplier told the Post that American Apparel’s vendors are worried the company will file for Chapter 11 bankruptcy protection and they will never receive payment for their work—an ongoing concern since last December, when reports first surfaced that the chain had been delaying payments to key suppliers by as much as 60 days.

The situation doesn’t show any signs of improving. American Apparel said in last month’s filing with the U.S. Securities and Exchange Commission that it had $11.2 million in cash as of August 11, as well as $210.6 million in long-term debt and a bond-interest payment of about $13.9 million due on October 15.

On top of that, legal costs keep rising as a result of fallen founder Dov Charney’s never-ending volley of lawsuits against American Apparel, while its sales continue to slide under CEO Paula Schneider.

For the three months ended June 30, the company reported net losses of $19.4 million, or $0.11 per share. Meanwhile, its market value has tumbled from $540 million to about $90 million in the last five years.

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