Restructuring specialists Hilco and GA Asset advisors are circling the UK arm of US fashion retailer American Apparel as the future of the retailer hangs in the balance.
American Apparel, which is backed by private equity firm Lion Capital, said last week in a US Securities and Exchange Commission filing that it may not have “sufficient liquidity” to continue operating for the next 12 months.
It is understood that Hilco has expressed an interest in American Apparel’s UK operations although no official discussion have been held. GA Asset Advisors is also understood to be interested in the UK arm, although it is unclear which parts of the retailer, if any, may be up for grabs. A source close to the situation said: “There will probably be detailed discussions when the time arises.”
Lion Capital is reportedly considering its options as American Apparel looks likely to breach the terms of its $80m (£51.8m) loan. Lion has the option to give the business breathing space but the retailer’s sales will need to increase.
Like-for-like sales were down 16% in the second quarter, when the retailer is expected to have made a loss of between $5m (£3.2m) and $7m (£4.5m).
The New York Stock Exchange has written to the retailer warning it could be delisted after the late filing of accounts. Shares in the company have fallen by about 76% this year. Lion Capital refused to comment on the situation.
In the UK, American Apparel has 15 stores selling young fashion, which has been popular with shoppers here - there was even a riot at Easter when it put on a special Sale in London.
The retailer’s founder, Dov Charney, has frequently made headlines for controversial advertising campaigns and apparent employee selection based on looks.