American Apparel Officially Filed for Bankruptcy: What Went Wrong

The troubled brand suffers another major setback

By Lindsey Sirera Oct 05, 2015 4:31 PMTags
American ApparelKatie Collins/PA

It's more bad news for American Apparel.

The brand well known for their bodysuits and leggings filed for bankruptcy early Monday morning, filing for a protective Chapter 11 petition in Delaware. The controversial clothing company has endured a lengthy battle with profits in addition to a slew of nightmarish PR scandals, and has suffered a drastic 17 percent drop in second quarter sales since just last year. And reportedly, the Los Angeles-based retailer is now roughly $300 million in the hole.

Patrick T. Fallon/Bloomberg via Getty Images

Really, the bankruptcy news can't come as a shock to anyone who's been keeping up with the once champion retailer's decline into ignominy. American Apparel hasn't turned a profit since 2009, and has repeatedly made headlines for all the wrong reasons, including model casting emails referencing "Instagram hoes"offensive mini skirt ads and hair-raising allegations against Charney for shocking instances of sexual harassment. 

"This restructuring will enable American Apparel to become a stronger, more vibrant company," American Apparel's acting CEO Paula Schneider said via press release. "By improving our financial footing, we will be able to refocus our business efforts on the execution of our turnaround strategy as we look to create new and relevant products, launch new design and merchandising initiatives, invest in new stores, grow our e-commerce business, and create captivating new marketing campaigns that will help drive our business forward."