American Apparel Inc., the bankrupt teen apparel retailer’s board has said ‘No’ to the latest takeover offer of US $ 300 million from a group of investors who were backing the return of Dov Charney, founder of the company.
Talking about the offer, Hagan Capital Group and Silver Creek Capital Partners said that their proposal included US $ 90 million of new equity and a US $ 40 million term loan.
Revealing more about the offer, Chad Hagan, Managing Partner at Hagan Capital Group, said that the investors back the return of Charney as co-CEO and the takeover plan was better for the company’s creditors. This decision by the board comes as a blow to Dov Charney who was planning to return to American Apparel. Charney was fired in 2014 for allegedly misusing company funds and failing to stop a subordinate from defaming former employees.
Also Read – American Apparel receives US $ 300 million buyout proposal
It may be noted that the apparel retailer has been struggling with funds for the past few years and applied for Chapter 11 bankruptcy in the month of October last year, and after filing for bankruptcy, the company joined the list of other struggling teen-focused retailers like Wet Seal and Body Central Corp.
On January 20, American Apparel will seek approval from a Bankruptcy Court judge for a reorganization plan it submitted at the time of filing for Chapter 11. The plan, which has gotten approval from most of its creditors, would take the company private and hand nearly 100% control to its largest bondholders.
Once hailed as the trendsetter in the industry, American Apparel image has suffered in the recent years due to mismanagement of funds. In addition, the Company has also seen a complete derailment of its businesses due to the competition given by labels like H&M.
