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American Apparel files for bankruptcy protection again in the US

American Apparel has filed for Chapter 11 bankruptcy protection for a second time in the US, less than a week after the firm’s UK business appointed administrators.

It first filed for bankruptcy in the US in October 2015 and emerged under the ownership of a group of former bondholders in February 2016. But the firm faced continuing declining sales and has been looking for a buyer.

American Apparel listed assets and liabilities in the range of $100m (£80m) to $500m (£400m), according to a Delaware court filing.

Canada-based Gildan Activewear said it will buy intellectual property rights related to the American Apparel brand and certain assets for $66m (£53m), but would not purchase any stores.

It will also separately buy inventory from American Apparel to sell while it integrates the brand into its printwear business.

The bankruptcy filing allows American Apparel to hold an auction for its assets and business, under which Gildan’s proposed acquisition would constitute the initial bid.

“Gildan has asked for the opportunity to maintain certain of our manufacturing, distribution and warehouse operations in and around Los Angeles,” American Apparel chairman Bradley Scher said in a letter to employees seen by Reuters.

The retailer is expected to operate as usual throughout the sale process in the US.

Drapers has contacted American Apparel for comment.

Last week, Nasty Gal also filed for Chapter 11 bankruptcy protection.

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