Gildan wins American Apparel auction with $88 million bid

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Reuters reported late yesterday that California-based Next Level Apparel (asi/73867) also made a bid to purchase American Apparel.

Montreal-based apparel maker Gildan Activewear Inc. has won an auction to buy the assets of American Apparel, which went into a court-supervised liquidation process earlier this year.

The transaction is subject to bankruptcy approval on Thursday and is expected to be completed by early February, Gildan said in a statement this morning.

Charney blamed American Apparel's downfall on "reckless Wall Street behavior" and said the company's decline also hurt its suppliers, which employ thousands of people in the Los Angeles area. It doesn't include American Apparel's stores.

While Bell said Gildan is considering hiring some workers in product design and merchandising, approximately 3,500 American Apparel employees have received notices that they could be laid off as soon as this month, according to California public notices.

Gildan agreed to pay $88 million to buy the brand and some manufacturing equipment.

Next Level's bid was deemed as qualified by American Apparel to be able to challenge Gildan, the person said.

American Apparel founder Dov Charney was fired in 2014 for allegedly violating secual harassment policy
American Apparel founder Dov Charney was fired in 2014 for allegedly violating secual harassment policy

Charney's campaign to retake control of the company was rejected in January 2016 by a USA bankruptcy court judge. Gildan already has plants in states including North Carolina and Georgia, but socks are the only finished goods made in the U.S.

American Apparel, in its second bankruptcy, is being sold in an auction that began Monday morning in NY.

American Apparel filed its second Chapter 11 in November with about US$177 million in debt after the failure of a turnaround plan.

American Apparel bucked fashion industry trends when founder Dov Charney opted to manufacture most of the firm's cotton basics in Los Angeles.

Gildan Activewear Inc. had to increase its offer for bankrupt American Apparel LLC by a whopping 33 percent, but it appears to have been enough to acquire the retailer's brand rights.

That doesn't mean American Apparel stores will necessarily stay open.

American Apparel voluntarily filed for Chapter 11 bankruptcy protection on the same day.