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American Apparel files for bankruptcy

October 18, 2015 by Archived posts 30 Comments

By Melanie Limon | Staff Writer |

American Apparel, a clothing store most famous for its outrageous prices and negative drama, has finally received what was coming to them this past Monday when they declared bankruptcy.

Crippled by its $19.4 million debt and their incredible decrease in sales American Apparel is now forced to acquire help from its financial lenders.

The company’s plan, as stated by The New York Times, is to partake in debt-equity swap. Here they would exchange debt for shares of their company.

They plan to receive funding from its lenders in order to pay off some of the debt, reducing their $311 million debt to $120 million (New York Times), in hopes for allowing their already settled stores to remain open and run smoothly even though they will have a very limited budget.

Their negligence in dealing with the decrease of sales in a timely manner was their downfall.

When asked about the company’s collapse, some students on campus seemed to agree on two main problems that American Apparel seemed to overlook, one, the fact that there is way too many brands out there competing against it and two, the company’s outrageous pricing on their clothing.

“I can understand why they are going bankrupt, It’s very competitive nowadays with companies like Forever 21 out there,” said CSUSB student Vivialyn Dineros.

“It’s like when Hollister wasn’t as popular because it was $60 for a pair of pants, there are not enough rich kids everywhere when the economy sucks to keep a business going bankrupt, so they did,” said student Kenya Williams.

Williams explained that American Apparel can gain new customers by offering huge blowout sales and adjusting their prices making their merchandise more affordable.

She continued by saying “$98 for a pair of pants, ridiculous is an understatement. It’s not like their jeans have some special technology to make the booty look nice or big or get you a man or something. So I don’t understand why they think that price is okay. I’m baffled.”

With pricing being the main factor for American Apparel’s debt, they continue to struggle in keeping relevance with their audience, who are now flocking into other clothing stores like Forever 21 and H&M.

“I kind of thought… that their clothes were expensive so that’s also one of the reasons it never caught my attention to shop there,” said CSUSB student Claudia Ramirez.

When asked about her thoughts on the American Apparel’s debt, Ramirez said “No one is shopping and they’re selling at high prices. So basically there’s overproduction and under consumption.”

Will debt be the new fashion trend this season?

Filed Under: Arts and Entertainment Tagged With: American Apparel, Arts and Entertainment, Bankruptcy, clothing, clothing store, company, coyote chronicle, csusb, csusb student, debt, melanie limon, money, stocks, Student

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