American Apparel Inc., known as much for its sexually charged advertising and controversial founder as for its fashion offerings, filed for Chapter 11 bankruptcy protection in the United States, Reuters reported.
The firm, which has not made a profit since 2009, joins a growing number of teenager-oriented retailers that have been unable to adjust to changing spending patterns and intense competition from fast-fashion brands such as H&M, Forever 21 and Zara.
The bankruptcy filing Monday could make American Apparel an attractive acquisition target, Lloyd Greif, chief executive of investment bank Greif & Co., was quoted as saying.
Many private equity firms had been waiting for the bankruptcy to happen, and it allows them to make operational changes that would otherwise be impossible, Greif said.
American Apparel chief executive Paula Schneider said the company was not looking to sell at any point soon.
The big loser from the bankruptcy will be founder Dov Charney, who was ousted as chief executive in December for alleged misconduct, including misusing company funds and failing to stop a subordinate from creating blog posts that defamed former employees.
His 42 percent stake in the company, which is held as collateral by New York hedge fund Standard General LP, will be wiped out, along with that of other shareholders.
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