While the amount involved is relatively small, the implications are not. American Apparel said in a filing with the U.S. Securities and Exchange Commission last month that it needs to raise more money and that it may not be able to do so.
According to a report at the New York Post, sources said The Knit House claims “there is growing concern among the retailer’s vendors that it will file for bankruptcy protection, which would leave them out in the cold.”
Raising the necessary cash is problematic. Shareholders have already rejected a management proposal to issue more shares. The company has been sued by founder and former CEO Dov Charney and the legal costs are eating into cash as well. Standard General, which has backed American Apparel with loans, accused the former CEO in a countersuit against Charney filed in July of campaigning to reduce the value of the shares he ceded control to.
Charney is the company’s largest shareholder, but voting control of the shares was passed to Standard General last year. Again according to a previous report in the Post, Charney is trying to round-up investors to help him buy back the company if it should fall into bankruptcy.
Shares of American Apparel closed at $0.18 on Friday in a 52-week range of $0.10 to $1.20.
ALSO READ: Companies Paying Americans the Least
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.