LOS ANGELES — American Apparel isn’t taking any chances.
The Los Angeles-based firm, which has been on a whirlwind ride to shuttle itself through bankruptcy proceedings, asked a judge to extend its exclusivity period for filing a reorganization plan in a move that seeks to block any alternative strategies from being filed.
American Apparel filed for bankruptcy in October and since then obtained $90 million in debtor-in-possession financing, shuttered underperforming stores and struck an agreement earlier this month to sell Oak NYC back to its original owners, all while trying to operate and turn a struggling business.
The company’s argument for the extension is that multiple plans would likely only increase costs and “quite likely impede — rather than facilitate — meaningful progress” toward the company’s exit from bankruptcy, American Apparel said in court documents.
The current exclusivity period ends Feb. 2, although the company said in its filing it is likely to have emerged from bankruptcy before that date. The extension is being requested in “an abundance of caution” the company said in its court filing. A hearing on its plan has been set for Jan. 20.
It’s no secret founder and former chief executive officer Dov Charney has been angling for a way back into American Apparel and has aligned himself with at least four parties in hopes of making a bid for the apparel manufacturer and retailer.
At least two groups had earlier this month been said to have executed non-disclosure agreements with American Apparel.
Meanwhile, the retailer continues to restructure its operations to get back on track. Last week American Apparel asked the bankruptcy court judge for permission to close eight additional stores in the U.S.
Half of the stores to be closed are in California and consist of its Echo Park door on Sunset Boulevard, 3rd Street Promenade store in Santa Monica; Fashion Valley Mall in San Diego, and one in Santa Clara. The remaining stores are in Norwalk, Conn.; Jersey City at the Newport Mall; Bridgeport Village in Tigard, Ore.; and Madison, Wis.
The stores are expected to close Jan. 30, according to court documents.
The store closures follow a request the company made in late October to the bankruptcy court to authorize the closure of nine American Apparel stores and four stores operating under the Oak New York brand.
American Apparel “decided to close eight additional underperforming stores that do not fit within their turnaround business plan,” the company said in its motion filed last week. It cited an inability to negotiate an “acceptable lease extension,” high rents or an inability to turnaround sales slumps in November and early December as reasons for the additional closures.