American Apparel continues to lose money after filing for bankruptcy last year, with a net loss of $14.5 million in November, according to its monthly operating report filed Friday.
In November, the Los Angeles retailer said sales were $22.3 million. That’s a decline from October, when sales were $29.2 million and net losses totaled $6.2 million, the report said.
The news of continuing losses comes at an uncertain time for American Apparel, which filed for bankruptcy in October.
The board of American Apparel Inc. this week rejected a $300-million takeover bid from investors who support the return of ousted Chief Executive Dov Charney, according to a person familiar with the matter.
The rejection of an offer from Hagan Capital Group and Silver Creek Capital Partners is yet another dramatic turn for the Los Angeles retailer. The investors, who had submitted a $200-million offer in December, could still make another bid for the company.
Chad Hagan, managing partner of Hagan Capital, said in an email that “negotiations are ongoing.”
“We are confident that American Apparel will accept our superior business model that centers on long-term value, ethical management and preserving American manufacturing jobs,” he said.
But the clock is counting down.
On Jan. 20, American Apparel will seek approval from a Bankruptcy Court judge for a reorganization plan it submitted at the time of filing for Chapter 11. The plan, which has gotten approval from most of its creditors, would take the company private and hand nearly 100% control to its largest bondholders.
Hagan said the investors back the return of Charney as co-CEO. Charney was fired in 2014 after an investigation uncovered allegations of misuse of company funds and inappropriate behavior with employees.
The investors said that senior lenders would fully recover their money, versus 33% to 77% under the other plan. Unsecured creditors would get $10 million to split, more than the $2.5 million offered by the reorganization deal, the investors said.
Analysts said the investors could try to recruit the unsecured creditors to their side and persuade the judge to postpone any final decision until he has examined the new offer.
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