Report: American Apparel Avoids Closures That Would Affect Nearly 3,500 Jobs In California
UPDATE: The company has said as a result of the deal struck with Gildan, no layoffs are anticipated.
The company filed the WARN act notice last week in anticipation of potential closures and layoffs, however, American Apparel says it has received assurances from Gildan's executives that no layoffs are anticipated.
Part of the company's bankruptcy declaration includes an assurance to keep the Southern California manufacturing jobs that were noted in the WARN notice filing:
"The Debtors, in their business judgment, selected the bid submitted by Gildan Activewear SRL ("Gildan") or the ("Stalkin~rse") as the stalking horse bid for the sale of their assets in the Cases. Gildan has agreed to purchase the Debtors' intellectual property and certain of their wholesale assets (collectively, the "Purchased Assets"). Importantly, as a key part of their agreement (the "Stalking Horse APA"), Gildan has negotiated for the opportunity to maintain all or a portion of the Debtors' Los Angeles manufacturing, distribution and warehouse operations."
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SACRAMENTO (CBS13/AP) — American Apparel is planning large cuts in closures as the company goes through bankruptcy, according to the California Employment Development Department.
A report from the EDD lists nearly 3,500 jobs will be affected by closures in Southern California:
- 2166 in Los Angeles
- 959 in South Gate
- 332 in Garden Grove
American Apparel reported the move to EDD on Nov. 7, with the closures effective on Jan. 6. That meets the required 60-day notice required by the state before a closure or mass layoff.
A company spokesperson said that the WARN act notices are a precautionary measure in case of layoffs due to a potential transaction.
The company is seeking bankruptcy protection for the second time in just over a year, unable to find its footing in a shifting retail landscape and after a contentious fight for control with company founder Dov Charney.
Canada's Gildan Activewear is buying the American Apparel brand, notorious for sexually provocative ad campaigns, for $66 million.
The Los Angeles retailer first filed for Chapter 11 bankruptcy protection in October 2015, about a year after it fired Charney for violating its sexual harassment policy. Charney's lengthy legal campaign to retake control of the company was rejected by a bankruptcy court judge in January.
Charney denies the sexual harassment charges and has claimed the company was taken from him in a "coup."
The company brought in CEO Paula Schneider to usher the company out of bankruptcy, but she left earlier this year as the turnaround stalled.
