By Evan Clark and Vicki M. Young
with contributions from Kari Hamanaka
 on August 17, 2016
American Apparel ron burkle

The next chapter of the American Apparel Inc. saga is getting under way.

Houlihan Lokey has been hired to sell the Los Angeles-based company and is reaching out to the “usual suspects” as potential buyers, according to a source familiar with the process. A spokeswoman for American Apparel said, “As we have regularly communicated to employees, vendors and customers, we continuously evaluate strategic alternatives.”

The sale effort comes just six months after the company, known for its colorful basics and its even more colorful past, exited bankruptcy.

Despite the well-documented woes before its bankruptcy in October — including a long string of losses, operational difficulties and the dramatic ouster and battle with its founder Dov Charney — American Apparel is seen as having some continuing appeal in the marketplace.

Even so, just who the “usual suspects” are in this case is not entirely clear.

“I have no idea what the proposition is so I don’t know if I’d be interested or not,” said Charney, reached by phone Wednesday. “There’s nothing else I would say. I’ve heard about it. No one’s approached me [about buying]. I don’t know what the terms are.”

Charney, who is now working on a new apparel line based in the Los Angeles area, declined comment when asked if he was still working with Hagan Capital Group and Silver Creek Capital Partners, the two firms he had aligned himself with in January on a $300 million offer to buy American Apparel.

“In December 2015, I submitted a $525 million indication of interest, and now less than a year after they went bankrupt, they’re struggling and trying to sell the company,” Charney said. “That I find astonishing….They’ve stripped the company of its assets. They’ve fired all the creatives with a brutal corporate control battle. They’ve lost hundreds of workers. It’s astonishing.”

After Charney’s bid failed in the bankruptcy process, the company’s creditors, including Goldman Sachs and Pentwater Capital Management, traded $230 million in debt for equity and now control the firm.

Financial observers expected the company to eventually change hands again, the question was always how long the creditors would wait before trying to cash out their investment.

Led by chief executive officer Paula Schneider, the brand has a sweatshop-free Made in America positioning that could be appealing as consumers grow more conscious of how and where their goods are made.

But there’s plenty of work to do. The brand, which once had sales of more than $600 million, has been cutting back to avoid excess inventory and inefficiencies and is also shifting away from the overt sex appeal it become known for under Charney and opting instead to focus on social issues to add some spice to the brand’s marketing. There were also reports this week that the firm was considering decamping from its longtime Los Angeles home to a less-expensive state.

One source speaking on condition of anonymity said American Apparel is expected to cap this year with less than $400 million in revenue.