American Apparel auctions off its assets
American Apparel auctioned off its assets Monday, with the winning bid scheduled to go before the bankruptcy judge for approval Thursday.
The Los Angeles clothier, which filed for bankruptcy in November for the second time, has received multiple bids, according to a person familiar with the situation who was not authorized to speak on the record.
Gildan Activewear, a Canadian clothing maker, is the stalking horse bidder with an offer of $66 million for American Apparel’s intellectual property rights and other assets. Companies that have expressed interest include e-commerce behemoth Amazon.com, cheap-chic retailer Forever 21 and garment maker Next Level apparel, according to Reuters.
It remains to be seen whether the winning bidder will keep any manufacturing in Southern California or the U.S. Gildan, which has manufacturing hubs in Central American and the Caribbean, has the option of buying some of American Apparel’s factories.
Last month, American Apparel notified nearly 3,500 Southland employees that they may lose their jobs, pending the outcome of the auction. The message went to 332 workers in Garden Grove, 959 workers in South Gate and 2,166 workers at the company’s sprawling headquarters in downtown Los Angeles.
Jasmin Yang, a bankruptcy attorney at Snell & Wilmer’s L.A. office who is not involved in the auction, said Gildan’s bid signals it is not interested in keeping manufacturing in California.
A telling sign: The price stays the same whether or not Gildan acquires the manufacturing facilities, Yang said. That indicates “they don’t think it’s worth anything or they don’t intend to follow through on it,” Yang said.
However, another bidder such as Amazon or Forever 21 may decide that keeping manufacturing in the U.S. could be a good bet with President-elect Donald Trump taking office this month. Trump has made U.S. manufacturing a key economic issue.
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