American Apparel filed for Chapter 11 Bankruptcy protection in a Delaware federal bankruptcy court on Monday. The troubled teen retailer listed between $100 million and $500 million in assets and liabilities in its bankruptcy filing, MSN Money noted.
The bankruptcy comes as no surprise. The retailer reported in August that it had "substantial doubt" that it would stay in business.
The publicly traded company listed several creditors in its filing. The largest creditor, at a $15 million unsecured claim, is the investment firm Standard General L.P., CNN Money noted.
The board approved a deal with 95 percent of the company's secured lenders to reduce the retailer's debt in the Chapter 11 petition, The New York Times reported.
Prior to the filing, in an attempt to fix the company's finances, the clothing maker was making an effort to close stores and to lay off employees, according to CNN Money. But layoffs were not included in the filing, which awaits approval by the bankruptcy court.
American Apparel estimated six months for the restructuring of the U.S.-based retail stores and stated that its overseas operations will not be affected, according to The New York Times. If approved, the bankruptcy would wipe out the shareholders' stake and put the company's creditors in control. The retailer's founder, Dov Charney, would lose his stake in the company valued at $8.2 million in shares.
American Apparel stores remain open, and the bankruptcy bought the teen retailer time to get itself out of the sales rut it's in, according to Bloomberg Business,
