US clothing firm American Apparel has filed for bankruptcy protection after securing a restructuring arrangement.
The controversial teenage brand, often in trouble in recent years for its overtly sexualised marketing drives, has said it has reached an agreement with 95 per cent of its lenders to reduce its substantial debts.
Around $200m (£131m) worth of bonds will be written off in exchange for equity in the restructured company, reducing the debt to $135m and removing $20m interest from annual payments. As part of the deal, the company has filed for chapter 11 bankruptcy.
Paula Schneider, American Apparel's chief executive, said: "This restructuring will enable American Apparel to become a stronger, more vibrant company.”
She added that the company will now 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”.
American Apparel won plaudits in the US for shunning foreign labour with its “Made in America” policy.