American Apparel Obtains Unanimous Approval of All Voting Classes to Accept Reorganization Plan

LOS ANGELES, Jan. 11, 2016 /PRNewswire/ -- American Apparel, Inc. announced today that it has obtained unanimous approval of all voting classes to accept its reorganization plan, a significant step forward that will enable the company to continue implementation of its current turnaround strategy under the existing leadership team.

The Company and its five affiliated debtors (collectively, "American Apparel"), the Official Committee of Unsecured Creditors (the "Creditors' Committee") and the Committee of Lead Lenders (holders of over 90% of the company's senior secured notes) have reached an agreement, subject to definitive documentation, on the key terms of an amended plan of reorganization (the "Amended Plan"). The plan features a commitment for an additional $40 million of capital, through an asset-based credit facility from a third party lender or the Committee of Lead Lenders. 

Paula Schneider, American Apparel's Chief Executive Officer, said: "This is an important step forward in emerging from our restructuring process as a stronger, more vibrant company. We are gratified to have reached this agreement with our Creditors' Committee and to have achieved this consensus from our unsecured creditors, and we would like to thank them for their support.  We remain focused on executing our turnaround plan, and positioning American Apparel for the future by creating new and relevant products, launching new design and merchandising initiatives, growing our e-commerce business, and creating exciting and creative marketing campaigns to share the story of our progress."

This agreement in principle will result in the filing of an Amended Plan containing, among other things, the following key terms:

• Unsecured creditors will receive their pro rata share of $2.5 million, a 150% increase from the payment that was provided for in the prior chapter 11 plan, which will be available to all unsecured creditors, regardless of whether any class of such creditors accepts or rejects the Amended Plan;
• The holders of the company's senior secured notes have agreed to waive their rights to receive this cash distribution on account of their unsecured deficiency claims, thereby significantly increasing recoveries to general unsecured creditors by approximately 30 times; and
• The funding of the litigation trust established for the benefit of unsecured creditors will be increased to $500,000, enabling the trust to investigate and pursue potential claims to increase recoveries to unsecured creditors.

It will be a condition to the effectiveness of the Amended Plan that American Apparel obtain the foregoing commitment for $40 million of additional exit capital, which is in addition to the $40 million of new capital previously committed by the Committee of Lead Lenders.

Andrew J. Herenstein, a co-founder of Monarch Alternative Capital LP, a member of the Committee of Lead Lenders, said: "This vote marks a significant milestone in the revitalization of American Apparel. We are very pleased that we were able to reach this agreement with the Unsecured Creditors Committee, and look forward to working with vendors, landlords, and all our stakeholders to build a better and stronger American Apparel."

Preliminary voting results as of the voting deadline of 5:00 p.m. Eastern time on January 7, 2016 indicate that all impaired classes of claims voted to accept the prior plan (these results are subject to ongoing audit and are not official until the filing of the voting agent's tabulation declaration).

American Apparel will file the Amended Plan in the coming days, and will seek approval of the Amended Plan at the plan confirmation hearing currently scheduled for 10 a.m. Eastern time on January 20, 2016 before the U.S. Bankruptcy Court for the District of Delaware.

American Apparel is represented in its chapter 11 cases by the law firm of Jones Day, restructuring advisor FTI Consulting, Inc. and investment bank Moelis & Company.

About American Apparel
American Apparel, Inc. (the "Company,") is a vertically-integrated manufacturer, distributor, and retailer of branded fashion-basic apparel based in downtown Los Angeles, California. As of September 30, 2015, the Company had approximately 8,700 employees and operated 218 retail stores in 19 countries including the United States and Canada. The Company also operates a global e-commerce site that serves over 50 countries worldwide at http://www.americanapparel.com. In addition, the Company operates a leading wholesale business that supplies high-quality T-shirts and other casual wear to distributors and screen printers.

Media Contact:
Weber Shandwick
Liz Cohen
(212) 445-8044
Arielle Patrick
(212) 445-8470

SOURCE American Apparel, Inc.

Related Links

http://www.americanapparel.com