American Apparel In Stormy Financial Waters: Some Investors Launch Investigation
Updated after the jump with a U.S. Attorney's subpoena and a filing indicating trouble making the terms of a loan. Originally posted at 5:07 a.m.
American Apparel, the maker of the American hipster uniform, appeared to be in dire financial straights this week as the publicly traded company seems to have failed a second deadline to file quarterly results with the New York Stock Exchange. At the same time an investors' advocacy group called the Shareholders Foundation announced it was investigating "possible breaches of fiduciary duty by certain members of the American Apparel board of directors ..."
The downtown Los Angeles-based clothing maker and retailer, founded by the iconoclastic and sexually-charged Dov Charney, missed its June deadline to file financial statements with the stock exchange; another deadline, Aug. 16, appeared to have slipped by this week with no filing.
The blog Jezebel noted this week that " ...being delisted from the NYSE -- or any major exchange -- is generally considered a prelude to bankruptcy."
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Meanwhile LA Biz Observed notes that the U.S. Attorney's Office in New York has subpoenaed the company regarding its switch of auditors (see below), and that a new filing it made with the Securities and Exchange Commission indicates it's having trouble coming to terms with a loan.
The clothing maker, which has 280 stores in 20 countries, has seen a series of financial woes, including the resignation of Deloitte & Touche as American Apparel's official financial watchdog in July.
The company's shares have lost more than 80 percent of their value since a 2007 high of more than $15.
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