Instead, U.S. Bankruptcy Judge Brendan Shannon’s ruling gives hedge funds like Monarch Alternative Capital the okay to control American Apparel and its more than 200 stores when it exits Chapter 11, reports Reuters.
The L.A. company filed for bankruptcy in October after having problems coming up with financing and struggling under a heavy debt load.
The approved plan will cut $200 million of debt and infuse the company with some much-needed cash. The company expects to be in the black by 2018. It hasn’t been profitable since 2009.
Charney had argued last week during a two-day trial that the company needed his creative talents to turn things around, calling out American Apparel’s sinking sales and inability to turn a profit since he was fired in December 2014.
Judge Shannon said he didn’t doubt that Charney and his investment pals were serious with their takeover bid, but that the company isn’t obligated to sell itself when it has a bankruptcy exit plan that has been approved by all classes of creditors.
The retailer’s board of directors turned down Charney and pals’ $300 million offer earlier this month.
Judge approves American Apparel bankruptcy exit plan [Reuters]
by Mary Beth Quirk via Consumerist