A $200 million bid is out for American Apparel.
The company, according to a source close to the matter, received a binding offer for the Los Angeles firm just as American Apparel seeks to ramp up efforts to accelerate its bankruptcy process and tamp down on any potential wrenches in its already submitted plan for reorganization.
The retailer late last year asked the judge overseeing its bankruptcy case to extend its period of exclusivity for filing a reorganization plan in a bid to muscle out multiple plans arguing such a scenario would “quite likely impede — rather than facilitate — meaningful progress” in its exit from bankruptcy.
Dov Charney, American Apparel’s founder and former chief executive officer, today filed an objection to the proposed plan and detailed an alternative proposal by two investment firms. The objection stated neither firm is working in conjunction with Charney, who declined comment.
The proposal, according to court documents, would leave American Apparel with $170 million coming out of bankruptcy and includes $30 million in cash. It is unclear what the executive team at the company would look like upon emergence from bankruptcy and whether Charney would be asked to return under the alternative proposal.
The bid was submitted to the company Dec. 29 and “still, it appears that the investors’ advisers are continuing to experience stall tactics or outright stonewalling,” Charney alleged in his objection.
He pointed to a number of flaws with the process, including the company’s efforts to seek out alternative proposals. The objection stated a letter for submitting bids to American Apparel was received Dec. 23, giving a deadline of Jan. 8 for any proposals. Charney went on to say in the filing that information requests for financial projections, the valuation process, obligations under the key employee retention plan and other items were “deficient.”
Charney revealed in December he was working with Los Angeles investment firm Cardinal Advisors on a bid for American Apparel and just a few weeks later two non-binding offers were said to be made for the company.
American Apparel appears unfazed by the latest chatter, saying in a prepared statement through a spokesperson: “American Apparel evaluates all bids consistently, and in the ordinary course. The company remains focused on pursuing the completion of its financial restructuring following its planned bankruptcy court hearing at the end of this month.”
A hearing on the reorganization plan has been scheduled for Jan. 20.