American Apparel bankruptcy deal leaves retail future in doubt

American Apparel, once a high-flying retailer that peaked at more than $600 million in sales, is probably headed toward liquidation after a bankruptcy auction ended with Canadian T-shirt and underwear maker Gildan Activewear buying intellectual property and other assets for $88 million.

This transaction doesn't include American Apparel's stores, and the fate of its garment workers in Los Angeles remains in doubt. The company had 4,700 employees and 110 stores as of November, when it filed for bankruptcy for the second time in 13 months.

Gildan said it has no obligation to keep any American Apparel employees.

'We've never been in a position to be able to assume operations,” Garry Bell, a spokesman for Montreal-based Gildan, said in an interview Tuesday. 'We're not buying an ongoing concern.”

The end comes about two years after American Apparel's board orchestrated the firing of founder and CEO, Dov Charney, for alleged misconduct, which he denies. Charney engaged in a bruising - and ultimately futile - public battle to regain control.

Saddled with high-interest debt racked up during Charney's tenure, American Apparel first filed for bankruptcy in October 2015 and was taken over by former bondholders led by Monarch Alternative Capital.

But the reorganization did little to slow American Apparel's decline as sales continued falling. A second bankruptcy, filed in November, focused on auctioning the company with an initial offer from Gildan for $66 million.

'I'm extremely disappointed,” Charney said in an interview Tuesday. 'This shouldn't have happened.”

Charney blamed American Apparel's downfall on 'reckless Wall Street behavior” and said the company's decline also hurt its suppliers, which employ thousands of people in the Los Angeles area.

Amazon.com, Forever 21 and Authentic Brands Group considered making offers for the assets, a person familiar with the situation said before Monday's auction. Next Level Apparel submitted a bid, according to Reuters.