The New York Stock Exchange, acting in the wake of American Apparel Inc.’s Chapter 11 bankruptcy filing, has suspended trading in the company’s stock and begun the delisting process.
American Apparel said it received notice Monday from the stock exchange that it is not suitable to be listed, the decision to delist the stock related to the uncertain timing and outcome of the bankruptcy process. The company does not intend to appeal the exchange’s determination.
Shares of the downtown L.A. apparel manufacturer and retailer closed at 11 cents on Oct. 2, the last day it traded.
Beyond being pummeled in the markets, American Apparel shareholders are expected to be knocked out by the bankruptcy.
American Apparel filed for Chapter 11 bankruptcy protection on Monday after reaching a deal with its creditors to swap their debt for equity. If the deal is approved, creditors including New York’s Monarch Alternative Capital, Coliseum Capital of Stamford, Conn., and Goldman Sachs Asset Management will take control of the business. Founder Dov Charney’s roughly $8 million stake would be wiped out.
“As previously stated, the company cautions that if the restructuring transactions contemplated by the restructuring support agreement filed in the bankruptcy court are consummated, the company's existing common stock will be extinguished and the holders of the common stock will not receive any consideration,” American Apparel wrote in the release.
That is not to say the business has entirely lost its appeal.
New York’s Authentic Brands Group is rumored to be interested in bankrupt downtown Los Angeles clothing manufacturer American Apparel, according to the New York Post.
Authentic Brands is an intellectual property licensing firm that owns Frederick’s of Hollywood, Prince Tennis and Juicy Couture, among other brands. It is a portfolio company of West L.A. private equity firm Leonard Green & Partners.
Representatives of American Apparel, Authentic Brands and Leonard Green did not return calls seeking comment.
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