If financial figures are
anything to go by, American Apparel is on a downward trajectory from which
there may be no turning back.
The once beloved retailer known for its basic tees and tongue-in-cheek
advertising no longer has enough reserves to keep operating for the next 12
months.
On the verge of bankruptcy
Worse, last week the Los Angeles-based company said it was on the verge of
bankruptcy, with losses announced on Monday widening its already growing
debts.
Low sales projections for the coming four quarters may mean the company’s
creditors will no longer be agreeable to give extentions to their loan
repayments.
All that comes as the company saw its sales dwindle a further 17 percent.
The company is due to pay a 15.4 million dollar bond payment this October,
however if you add the estimated 3.6 million dollars in legal bills from
its lawsuit with founder and former CEO Dov Charney, and the 34 million
dollars it owes the federal government, bankruptcy may be a better option.
The 16-year old retailer is apparently in discussions with Capital One to
try to find a waiver for the federal government bill, citing its current
lack of cash reserves.
In another strange turn, American Apparel’s ousted founder Charney has been
named as a potential buyer should the company go under. Perhaps this is a
case of what goes around comes around?
image:Amercican Appare
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