The fate of American Apparel’s 110-store retail chain should be known by the holiday season, when a bankruptcy auction will test the market’s appetite for distressed sellers of young-adult fashions, the Wall Street Journal reported today. American Apparel has an offer in hand from Gildan Activewear Inc. for its brand, some wholesale inventory and possibly some manufacturing and distribution operations. A spokeswoman for the company said yesterday there are other potential offers, including some that involve American Apparel’s retail operations. “There is an opportunity maybe for a going concern sale,” said Gerard Uzzi, a lawyer for lenders owed about $190 million. That is an improvement over a grim scenario that was taking shape last week, he said. Bleeding cash after a failed bankruptcy turnaround, American Apparel returned to chapter 11 bankruptcy protection Monday and yesterday won interim approval on a $30 million loan that will keep the store doors open and operating, at least for a time. Gildan is requiring that the American Apparel retail chain remains in operation while it moves toward a December auction, with a sale in January. Until Gildan closes a deal, the stores are safe, according to Scott Greenberg, a lawyer for American Apparel. Read mroe. (Subscription required.)
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