American Apparel Files for Chapter 11

American Apparel's legal troubles with its ousted founder, combined with dipping sales and huge debts, have proved too much for the company, which filed for bankruptcy in Delaware on Monday. As part of the Chapter 11 filing, more than $200 million of bonds will be swapped for stock in the company, which had $161 million more liabilities than assets as of June, reports Bloomberg. With bondholders providing $90 million in financing and $70 million in new liquidity, the filing will allow American Apparel to continue its manufacturing operations and keep its 130 US stores open, reports the New York Times. There was no mention of layoffs. The reorganization is expected to last about six months. (More American Apparel stories.)