The fate of American Apparel rests with a bankruptcy court judge next week.
A request by American Apparel Dov Charney to stop the company from blocking alternative reorganization plans will be considered at a hearing scheduled Jan. 20, a judge ruled today. Any objections to Charney’s request would need to be filed by Friday.
The hearing will weigh the merits of the company’s case to extend the exclusive period for which American Apparel has to submit a reorganization plan with company founder Dov Charney’s argument against it. Should Charney come out the victor, the move would allow alternative plans for how American Apparel will exit bankruptcy to enter the picture.
That would include consideration of a $300 million bid for the Los Angeles firm, which was submitted to the company Sunday. The proposal comes from an investor group composed of Hagan Capital Group and Silver Creek Capital Partners.
Charney on Tuesday presented the court with a preliminary list of witnesses for the hearing that includes himself, Chad Hagan of Hagan Capital and former American Apparel board member Robert Mintz, along with Lyndon Lea of Lion Capital, a private equity firm that initially loaned the company money back in 2009.
Meanwhile, American Apparel has continued to chug along with its restructure despite the noise that has erupted since Charney’s ouster from the firm in late 2014. The company said Monday it received support from all voting classes on its plan for reorganization, which includes $2.5 million set aside for unsecured creditors. The Hagan-Silver Creek deal proposes a recovery to that same group of “10 times that under the debtor’s plan,” according to the group’s announcement on its bid.