American Apparel is preparing for its second bankruptcy filing in as many years, according to people familiar with the situation, capping a tumultuous stretch that included tumbling sales, red ink and a split with controversial founder Dov Charney. The filing may come as soon as the next few weeks, according to the people, who asked not to be identified because the discussions aren’t public. The move could help set the stage for a sale of the Los Angeles-based company by letting it exit leases and shutter part of the retail operation, according to the people.
Total Retail's Take: A tumultuous stretch is putting it nicely. American Apparel's sales have tanked, its management team is a revolving door and controversy seems to follow the brand. This latest bankruptcy filing, which at this point hasn't happened yet, hopefully will stabilize the retailer and allow it reorganize and begin a comeback. Otherwise you have to question how long American Apparel will survive.