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New Bankruptcy Warning for American Apparel

Published on 04/13/2011 -

American Apparel, a retail store with 273 locations and approximately 12,000 employees, is running the risk of filing for bankruptcy. According to their financial statement, ''2010 was an extremely challenging but productive year.

We suffered the after-effects of a major labor disruption resulting from an immigration intervention in 2009.'' The company has also been under fire for sexual harassment, including complaints that their advertising utilizes overtly sexual images.

There have also been findings of illegal immigrants employed at various store locations. Sales have been reported to be down by 8.9% at $144 million.

The company claims that due to a disruption in its production, the production costs are higher. However, the company may be prohibited to borrow more money under its credit agreements as the result of a greater concern for the company's ability to keep up in this economy.

According to the annual report, the company may choose to file for a type of Chapter 11 bankruptcy.

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