American Apparel, once a high-flying retailer that peaked at more than $600 million in sales, is probably headed toward liquidation after a bankruptcy auction ended with Canadian T-shirt and underwear maker Gildan Activewear Inc. buying intellectual property and other assets for $88 million, Bloomberg News reported yesterday. This transaction doesn’t include American Apparel’s stores, and the fate of its garment workers in Los Angeles remains in doubt. The company had 4,700 employees and 110 stores as of November, when it filed for bankruptcy for the second time in 13 months. Gildan said that it has no obligation to keep any American Apparel employees. The end comes about two years after American Apparel’s board orchestrated the firing of founder and chief executive officer, Dov Charney, for alleged misconduct, which he denies. Charney engaged in a bruising -- and ultimately futile -- public battle to regain control. Saddled with high-interest debt racked up during Charney’s tenure, American Apparel first filed for bankruptcy in October 2015 and was taken over by former bondholders led by Monarch Alternative Capital. But the reorganization did little to slow American Apparel’s decline as sales continued falling.
Canadian apparel maker Gildan Activewear Inc. said that it had won a bankruptcy auction to buy U.S. fashion retailer American Apparel for about $88 million in cash, Reuters reported today. The deal is subject to approval from a bankruptcy court on Thursday, the company said. Under the deal, Gildan will acquire the intellectual property rights related to the American Apparel brand and certain manufacturing equipment. The company, however, will not buy any of the 110 American Apparel retail stores.
A New York federal judge has shot down an effort by creditors of the former Tribune Co. to claw back $8 billion from shareholders who sold stock in the publisher's 2007 buyout, bringing a long-running legal battle sparked by its bankruptcy closer to an end, Reuters reported yesterday. The ruling stems from the tangled litigation following real estate mogul Sam Zell's leveraged buyout of the Chicago Tribune and Los Angeles Times publisher, which creditors blame for its 2008 bankruptcy. In an attempt to recover money raised from the buyout, Tribune creditors have spent years pursuing unusual claims in court, such as trying to hold passive shareholders accountable for the failed deal. In a ruling published yesterday, Judge Richard Sullivan dismissed such claims and absolved individual shareholders from complying with creditors' demands that they hand over the money from the sale of their stock in the buyout. The shareholders included retired employees, whose pension funding was in the form of Tribune stock, and pension plans that also held stock at the time of the buyout and sold their shares. Judge Sullivan said that the deal was approved by independent directors and that creditors lacked sufficient evidence to allege that those directors had tried to defraud them through the buyout of the publisher.
Fashion Square Mall owners filed a Chapter 11 bankruptcy on Friday, while accusing its lender — The Bancorp — of cutting off promised funding for planned renovations, the Orlando Sentinel reported. The bankruptcy filing on Friday automatically halts a foreclosure lawsuit filed on Tuesday by The Bancorp against Orlando’s Fashion Square, which alleged that the mall owner had fallen behind on payments for its $42.2 million loan. Bankruptcy documents state that the mall owner, an affiliate of Tennessee-based UP Development, withheld payments on the loan because it learned that Bancorp was "misrepresenting" details of the renovation plans. But the bank has alleged that UP has "grossly mismanaged" the mall and failed to pay taxes.
A federal judge on Friday froze the assets of Boston Grand Prix president John Casey as part of an $11 million bankruptcy case stemming from the collapse of an Indycar race that had been planned for the Seaport District last Labor Day weekend, the Boston Globe reported on Saturday. The ruling by Bankruptcy Judge Joan N. Feeney came after Casey was accused last week in court filings of using the Boston Grand Prix as “his personal piggy [bank].” “John Casey spent hundreds of thousands of dollars of Boston Grand Prix’s money for personal expenses without regard for the interests of creditors,” said attorney Kate Cruickshank of the firm Murphy & King, who is representing creditors in the case. “It’s the job of the bankruptcy trustee to recover assets belonging to Boston Grand Prix for all creditors.”