Trendy clothing retailer American Apparel that released controversial advertisement with words “Made in Bangladesh,” has filed for bankruptcy protection.
The advertisement, which was released last year, featured “Made in Bangladesh” across a model's bare chest.
Read More: American Apparel releases controversial Bangladesh ad
The scandal-ridden teenage fashion company filed for the bankruptcy protection early this morning (Oct. 5) after persistent plunging of sales, reported a number of International news outlets.
The Los Angeles-based company, which makes all its clothes in the US, said it had reached a restructuring deal with 95% of its secured lenders to reduce its debts.
Lenders will write off about $200m (£131m) of bonds in exchange for equity in the company, reducing its $300m debt to no more than $135m and cutting annual interest payments by $20m.
As part of the deal, American Apparel will file for chapter 11 bankruptcy protection, the company said in a statement.
The retailer, which was founded in 1989 and listed in 2006, remains committed to manufacturing its clothes in the US, it says.
It expanded to sell US-manufactured clothing from 260 shops in 19 countries, attracting notoriety for explicit advertising.
Then the company courted infamy with sexualised advertising before a string of allegations against its founder undermined any lingering glamour from its image.
Dov Charney, the 46-year-old Canadian, who once held a meeting wearing only a sock – not on his foot – has been cited in several sexual harassment lawsuits brought by former employees.
However, it was mainly financial rather than sexual matters that led to the company’s downfall as American Apparel failed to keep up with its young consumers’ tastes.
Take A Look: The real problem with American Apparel
Charney’s behaviour arguably sapped the company’s morale and took its sexualised image too far for young shoppers.
Charney had built American Apparel into one of the world’s most admired fashion brands, trading on an image that combined hipster chic and the sexual mores of the 1970s.
American Apparel’s board fired Charney as chairman in June 2014 and sacked him as chief executive in December for sexual misconduct.
Also Read: Undressing the American Apparel ad
American Apparel’s bankruptcy had looked likely for some time after it suffered mounting losses.
The company reported a $19.4m loss in the second quarter of this year – its 10th consecutive quarterly loss – as sales dropped 17%.
The company listed assets and liabilities of between $100m and $500m in its bankruptcy filing.
