American Apparel’s disclosure statement, which became hotly contested in more recent days, officially got the nod of approval from a bankruptcy court judge today.
The document, which is used by creditors before they go on to vote for or against a company’s reorganization plan after emerging from bankruptcy, was the target of criticism from American Apparel’s group of unsecured creditors as well as founder and former chief executive officer Dov Charney himself.
Charney took aim at a number of what he called “misstatements of fact” in the document, ranging from the year the company was founded up to the investigation that led to his dismissal last year. The unsecured creditors’ objection partially revolved around the lack of recognition for the number of lawsuits American Apparel faces, some of which involve Charney. The company shook off the latter’s criticisms in a legal response of its own, calling the committee’s objections “manufactured controversies.”
Charney took a small win during a hearing that tackled several matters, including the disclosure statement, in court Thursday, when the judge reportedly allowed for some editing on the characterization of the former ceo’s firing. A paragraph was added to the statement that makes it clear Charney disputes a number of the facts related to his termination and directs people to the objection he filed in court earlier this month.
A hearing on the plan of reorganization is scheduled for Jan. 20.
American Apparel may also move forward with the shuttering of 13 stores, following a separate ruling filed today. The company may close nine American Apparel stores in New York, California, Texas, Maryland, Michigan, Florida and Illinois. It may also proceed with the closure of its four Oak stores in New York and Los Angeles as well as hold closing sales as it divests itself of the much smaller business.
The plan for Oak had also been contested in court this month when the fashion-forward label’s founders objected to the strategy, arguing they had an offer to buy back the line and keep the stores operating.