On Friday, a U.S. Bankruptcy Court judge approved Gildan Activewear’s purchase of American Apparel’s name, manufacturing equipment and wholesale merchandise, which will result in the closure of all American Apparel stores by the end of April, California Apparel News reported.
A potential buyer, Bronc’s Inc., which operates as Westcoast Textile in Compton, Calif., offered between $200,000 and $250,000 for American Apparel’s knitting and dyeing factory in Garden Grove, Calif. However, Gildan Activewear’s acquisition means that American Apparel’s facilities in Los Angeles and South Gate will cease T-shirt and clothing production, which could lead to more layoffs for the troubled retailer’s employees.
“We are not sure where we will be doing production,” Gildan Activewear VP of corporate marketing and communications Garry Bell said. “As we develop our go-forward plans, we are looking at a lot of things, such as labor costs and energy costs.”
American Apparel’s store closings follow Gildan Activewear’s winning bid for American Apparel. The Canadian apparel maker won American Apparel’s auction on Jan. 10 and offered $88 million for the troubled retailer, which was higher than its initial bid of $66 million. Although Amazon and Forever 21 allegedly bid on American Apparel, Gildan Activewear fronted $22 million to secure its top spot.
American Apparel originally filed for Chapter 11 in October 2015, to restructure its financial debt and minimize its annual interest expenses. Despite emerging from Chapter 11 early last year, American Apparel stepped up its buyer search in November 2016. The retailer was on the brink of a second bankruptcy filing, due to unresolved financial burdens.