As the days drag on, American Apparel grows weaker and closer to bankruptcy. The company now has $91 million dollars in debt; American Apparel also estimated 2nd quarter losses from operations alone to be $5 to $7 million.
According to NYMag, “the company was just subpoenaed by the United States Attorney for the Southern District of New York for switching accounting firms, which sent the stock price tumbling 13 percent — leaving the shares dropping 66 percent as a whole over the last twelve months. The company has also failed to file its second-quarter earnings, while the SEC continues to threaten to de-list the company from the stock exchange. Meanwhile, CEO Dov Charney says that American Apparel might not meet obligations to creditors, which could lead to them losing access to their last lifeline of credit. All of these things, the company says, “raise substantial doubt that the company will be able to continue” under the threat of going bankrupt.”