American Apparel Sells Brand to Gildan
Gildan Activewear Inc. on Tuesday said it won the court-supervised auction to buy American Apparel LLC’s brand and other assets out of bankruptcy for $88 million.
American Apparel attracted multiple bids, according to people familiar with the matter, but the auction action featured a battle between the Canadian manufacturer and YS Garments, which does business as Next Level Apparel.
Gildan had set the floor for the auction, which began Monday at the New York offices of American Apparel’s bankruptcy lawyers Jones Day, with a $66 million bid for the brand name and some of the wholesale inventory. However, on Friday, Next Level as well as liquidators submitted bids for American Apparel’s assets.
Judge Brendan Shannon will consider approval of the sale at a hearing slated for Thursday in U.S. Bankruptcy Court in Wilmington, Del.
Gildan is buying American Apparel’s brand and certain manufacturing equipment. The company also plans to separately buy inventory from American Apparel while it integrates the brand within its printwear business.
A Next Level spokesman declined to comment on the matter.
The troubled retailer was unable to garner a bid that would keep its more than 100 stores and three manufacturing facilities open. Liquidators such as Great American Group and Tiger Capital Group LLC had teamed up to bid as well, one of the people familiar with the matter said. However, the liquidator bids had been rejected early Monday, in favor of self-liquidation..
Amazon Inc. and Forever 21, who were reportedly weighing offers for the troubled retailer, didn’t end up submitting bids, the person added. Amazon and Forever 21 didn’t respond to requests for comment on the matter.
American Apparel’s stores were required to remain open during the initial chapter 11 proceedings, but a bankruptcy lawyer for Gildan had said at an earlier court hearing the Canadian manufacturer was prepared to move swiftly to cut off the cash if the stores didn’t receive any bids.
Last month American Apparel said it would be closing nine of its stores, including locations in Tribeca and Washington D.C.’s Georgetown neighborhood. The company had also notified 3,500 of its California-based headquarters, manufacturing and wholesale employees in December that they could lose their jobs in connection with the bankruptcy.
At the time a spokeswoman for the retailer said that layoff notices were federally required, and “purely a legal precaution.”
American Apparel sought chapter 11 protection in November, less than a year after it emerged from its first bankruptcy filing.
The reorganization had been centered around a debt-for-equity swap that was supposed to save the retailer. Instead, when it became apparent this year that the reorganization plan wouldn’t work, American Apparel began to look for buyers months before seeking bankruptcy protection.