American Apparel is “surprised and disappointed.”
That’s the way attorneys for the Los Angeles firm described the company in documents filed in U.S. Bankruptcy Court Monday on pushback it received by the unsecured creditors committee related to its disclosure statement. The statement is the document all companies seeking bankruptcy protection are required to produce after filing for Chapter 11 to allow creditors enough information to evaluate a business’ proposed reorganization plan.
The company went on to say with its rebuttal in court that “much of the invective on display in the committee’s objection had never been expressed or even suggested to the debtors prior to the filing of the committee’s objection.” The company didn’t stop there and said in its response that “many of the manufactured controversies highlighted in the committee’s objection could have been avoided” had it come to the company prior to the disclosure statement being filed last month. American Apparel called the objection “a reckless attack” on its plans for reorganization.
The company’s response was joined by the committee of lead lenders, which filed a separate response in court.
While the unsecured creditors committee called the disclosure statement full of shortcomings, one concern it raised was the lack of transparency into the litigation the company and some of its executives face, some of which involves founder and former chief executive officer Dov Charney.
Charney himself filed his own separate objection in court last week to various parts of the disclosure statement, which he described in court documents as having “numerous material misstatements of fact.”
In other American Apparel news, the company continued to hold its position on a plan to walk away from the more fashion-forward Oak business. The company’s plan was met with opposition last week when Oak’s founders said a deal to sell the business to them for $600,000 would leave more money on the table for American Apparel. The company contends holding in-store sales could produce more than $2 million in proceeds for American Apparel.