American Apparel Wins Court Approval of Bankruptcy Loan
American Apparel won court approval to use a previously announced $30 million financing package from Encina Business Credit, according to the The Wall Street Journal. The bankruptcy trustee for American Apparel’s earlier Chapter 11 (from which it emerged in February) last week advocated this second bankruptcy action be shut down with prejudice, saying it's an “egregious” and prohibited effort to avoid the settlement payments the company should be making under the first plan. However, a U.S. bankruptcy court judge in Wilmington, Del. on Monday signed off on the financing agreement, saying he “appreciated” the agreements made among the creditors, debtors and pre-bankruptcy lenders.
Total Retail’s Take: This is American Apparel’s second bankruptcy filing in a little over a year. This one is a bit different from last year’s, which was meant to set the stage for the apparel retailer’s comeback. This time, there's no such talk and it seems as though the company is making sure its creditors are satisfied and its assets are distributed as it looks to sell itself.