American Apparel might be on the verge of joining a very exclusive club currently occupied by 50 Cent.
The brand is reportedly on the edge of bankruptcy, the New York Post reports. While the company has already admitted it might not last the year, the release of its quarterly reports could spell doom for the company which is short on cash and, to put a spin on Fifty's line, watching the debt pile up.
AA only has $10 million left and must make a bond payment of $15.4 million this October. The company pays this bond twice annually, and when the bill came up in April, it was forced to borrow money from hedge fund manager Standard General. The company reported that it had $21 million at the end of April, but that included the $15 million loan from Standard General.
Not only are sales way down for the company, but its former CEO Dov Charney has hit the company with a barrage of lawsuits, claiming he's owed $40 million due to emotional distress, that cost big money to fight.
In what would be a plot twist for AA, Charney is already in talks with investors who would help him buy the company back if it does file for bankruptcy, the New York Post reports. Unfortunately, bankruptcy may be the most likely scenario for the company. "My expectation is that the quarter will be horrible," shareholder Michael Bigger told the New York Post.
For all the rebranding American Apparel has done, with a new menswear designer, revamped code of conduct, and SFW advertising, it looks like it could all be for naught. Best to head down to your local store and stock up on neon fanny packs and other essentials before they're gone forever.
We've reached out to Charney for a comment and will update as soon as we know more.