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American Apparel short-staffed for the holidays due to unpaid bills

By Sara Ehlers

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Business

Los Angeles - It seems that it’s still quite an uphill battle for American Apparel. The Los Angeles-based retail company faces new struggles due to one of its vendor withholding services.

American Apparel’s vendor iTek Services Inc., a scanner repair service company, has decided to withhold its scanners due to an unpaid bill. According to iTek, the fashion company has yet to address an unpaid balance. In response to this, American Apparel has asked the U.S. Bankruptcy Court in favor of their company in order to stop iTek from withholding the scanners. Currently, iTek its withhold 50 scanners at one of the brand’s distribution centers.

This makes things difficult for the company as the brand currently only has access to 130 scanners according to WWD. The brand is also trying to repair a portion of its scanners, as the holiday season is near. Due to this inconvenience, the publication reported that approximately 25 percent of its workers will not be able to work.

iTek refuses to work with American Apparel due to unpaid balance

This issue can only cause more damage to the company, as American Apparel just voluntarily filed for Chapter 11 bankruptcy earlier this month. This filing was within one year after emerging from its first bankruptcy filing. American Apparel had successfully exited from bankruptcy as of February this year. However, it seems that the company is headed towards an unstable financial path again.

The bankruptcy filing came after former chief executive officer Paula Schneider left her post. She worked with the company during its first filing and helped bring American Apparel towards a turnaround strategy towards success. This plan included turning millions of dollars of bonds into equity for the company as well as several restructuring initiatives. However, as fruitful as those plans may have seemed, it turns out that the Los Angeles company is still not doing too well.

While the company deals with issues from its vendors, it is still in the process of finding a buyer as well. The company agreed to sell its intellectual property rights to Canadian apparel manufacturer Gildan Activewear for approximately 66 million dollars, FashionUnited reported. At the moment, this deal does not include any of the company’s retail stores, according to WWD. With the new buyer, it’s likely that American Apparel will survive but it may emerge in a new way.

Image: American Apparel Facebook

American Apparel