Oak’s founders would like their company back now.
Attorneys for Jeff M. Madalena and Louis Terline, the founders of the fashion brand Oak, are offering $600,000 to buy back the company’s inventory from American Apparel.
American Apparel, which filed for bankruptcy protection in October, recently requested permission from a bankruptcy court judge to liquidate merchandise from the Oak brand’s four stores in Los Angeles and New York and divest itself of the business it acquired in mid-2013 to focus on the American Apparel turnaround.
Madalena and Terline, if their bid is successful, said in their court objection to American Apparel’s proposed plans for the business that they would keep the Oak stores open, which would stave off the layoffs of about 40 workers.
The two argued in the court filing that liquidation sales would generate for American Apparel less than what the two are offering the company. Additionally, at the time of the 2013 sale, subleases for the Oak Los Angeles stores were never signed off on and American Apparel had technically been a month-to-month user of the spaces. The Oak founders now argue in court documents that American Apparel has no right to hold sales at those two stores.
Representatives for each party could not be reached for comment. A hearing on the matter has been scheduled for Dec. 17 in Delaware.
Oak is the more fashion-forward label that American Apparel acquired, in its first major purchase, for an undisclosed amount. It was a small enough price tag that it didn’t require a filing with the Securities and Exchange Commission.
The business, which was doing about $5 million at the time of the purchase, is composed of four stores plus an online site selling Oak-branded merchandise mixed in with designers such as Comme des Garçons and Tom Ford.