American Apparel said in court documents today it hopes to close 13 stores and, in separate filings, requested approval on a $2.3 million employee-retention plan it hopes will stem the tide of worker departures.
The Los Angeles firm, which filed for Chapter 11 bankruptcy this month, said the majority of those doors have been in the red for at least the past 12 months and have struggled under the weight of rents in some cases double that of market rates.
The plan, as described in court documents, would be to begin store closing sales, upon court approval, and close the doors permanently by year-end.
The American Apparel stores are located in Illinois, Florida, Maryland, Michigan and Texas. Two are located in California and another two in New York.
The remaining four store closures are that of the company’s OAK brand, with the plan also calling for the closure of the Oak online store, following unsuccessful negotiations to sell off the business.
The Oak stores to close, if approved by a judge, are located in Williamsburg and Manhattan along with two in Los Angeles.
American Apparel in 2013 acquired Oak, which does not do its own manufacturing and is also priced higher at retail than the American Apparel line.
The legal filing said Oak was intended to complement American Apparel but went on to say the business ultimately proved unsuccessful.
“Rather than devote additional resources and management to turnaround the Oak business, the debtors have determined it is in the best interests of their estates and creditors to divest the Oak business and to focus instead on the reorganization of the debtors’ core American Apparel retail and online stores,” court documents said.
The company said in its filing it had engaged in discussions with two potential buyers but was unable to reach an agreed upon purchase price.
Attorneys for American Apparel are also seeking court approval on an employee-retention plan totaling about $2.3 million.
Separate documents filed in court Friday requested approval on a plan that aims to retain key employees, of which 82 have been identified. The filing did not include the names of those individuals but they span multiple departments, including retail, manufacturing, distribution, merchandising, financing and IT.
The company said it has seen an exodus of 30 workers with operations and administrative duties in addition to a roughly 6 percent reduction in their retail staff since the bankruptcy court filing.