American Apparel ceo Dov Charney told Counselor magazine that his company would not go bankrupt and that reports that the apparel company is unstable are inaccurate.
“First of all, the announcement about us possibly seeking bankruptcy protection is something we did as an obligation to shareholders to explain that it's a possibility, however remote,” Charney told Counselor. “In reality, to say that the company is unstable is not accurate.”
The Los Angeles-based company has been under scrutiny for financial troubles, a long-running sales slump and controversies surrounding Charney’s personal behavior.
The company is required to furnish audited financial statements to Bank of America and Bank of Montreal that do not contain a “going concern” qualification by April 30. However, last week, it announced a net loss for 2010 of $86.3 million. And Reuters reports that Lion Capital, one of American Apparel's largest creditors, has hired restructuring firm Miller Buckfire & Co. in case developments push the company toward a Chapter 11 bankruptcy filing.
Despite the questions surrounding its financial stability, the company announced this week that it’s launching its own line of denim made it its Los Angeles factory.