Over 3,000 American Apparel Workers May Lose Jobs as Company Goes Bankrupt; Amazon and Forever 21 in Buy-Out Talks
Over 3,000 American Apparel LLC employees are facing potential layoffs as the day for the company's bankruptcy auction edges closer.
The clothing brand has reportedly ramped up security at its Los Angeles HQ and notices about career training and job placement have been posted in elevators, according to NY Post.
The LA-based clothing company, which made its branding theme "Made in the U.S.A", declared bankruptcy for the second time in November last year. The brand's financial problems are attributed in part to its manufacturing plant in California, one of the most expensive states in terms of labor costs in the United States.
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After announcing their impending bankruptcy auction, American Apparel had warned workers in three local production facilities -- 332 in Garden Grove, 959 in South Gate and 2,166 at the company's Los Angeles HQ -- of potential layoffs on January 7. This was done in compliance with the labor law requiring advance notice of mass layoffs.
However, the company has maintained that the layoffs are "potential, NOT pending", reports the Los Angeles Times.
After the auction, "we will have more clarity on the go-forward plan," Craig Simmons, the chief human resources officer, wrote in a letter to employees, "depending on which buyer or buyers succeed, and how they wish to move forward."
Amazon.com and teen apparel store chain Forever 21 are among the interested companies expected to make an offer for the American Apparel brand and its assets before the auction's Friday deadline, reports Reuters.
Following their bankruptcy announcement in November, American Apparel had agreed to a $66 million stalking horse bid from Gildan Activewear. The Canadian sportswear firm made the bid for American Apparel's intellectual property rights and a few other assets, but they have no interest in the 193 stores across the globe bearing the American company's name.
This leaves the door open for other potential buyers to make competing offers for the American clothing brand before the auction comes to an end.
