American Apparel Said to Seek Advisers for Bankruptcy Deal Talks

NEW YORK, United States — American Apparel Inc. is seeking advisers to help craft a plan to restructure the company in bankruptcy court, according to two people with knowledge of the matter.

The seller of T-shirts and casual-wear has made calls in recent weeks to advisory firms as it prepares to negotiate a bankruptcy loan with creditors to fund it through the process, said the people, who asked not to be named because the discussions are private.

Jones Day, which has been helping American Apparel with capital raising, will be expanding its role into restructuring capacity, said the people.

The Los Angeles-based retailer said last week it may not be able to continue its operations as a going concern for the next 12 months, even after lenders increased its credit line. A group of lenders, including American Apparel’s largest shareholder Standard General, boosted the credit line to $90 million from $50 million, according to a company statement.

The clothing maker has been in disarray since founder Dov Charney was suspended and then fired as chief executive officer last December for alleged misconduct. The chain posted five consecutive yearly losses dating to 2010, totalling $338 million, before reporting a $92.9 million loss in the first half of 2015.

Chelsea Grayson, a spokeswoman at American Apparel, didn’t comment. John Dillard, a spokesman for Standard General at Weber Shandwick, declined to comment, while Dave Petrou, a spokesman for Jones Day, didn’t immediately respond to e-mail and telephone messages.

American Apparel delayed its second-quarter earnings report this month because it had to negotiate with Capital One Financial Corp. for waivers on two financial-ratio requirements in its credit line. The lender was replaced by the new group led by Standard General in August. The hedge fund also loaned American Apparel $25 million last July.

The company also said in August that it may have to raise more capital or restructure its debt. The chain had $11.2 million in cash as of Aug. 11 and it has a $13.9 million cash interest payment due on Oct. 15.

By Jodi Xu Klein, with assistance from Matt Townsend and Lauren Coleman-Lochner; editors: Shannon D. Harrington, Kenneth Pringle and Faris Khan.