American Apparel needs cash soon or it will be forced to declare bankruptcy. The troubled retailer has about $13 million in available cash, and risks default if it does not raise money or refinance its debt.
Last month the company disclosed it was running short on cash to meet its obligations over the next 12 months, and said it would close stores to cut costs, Nasdaq reported. The strategic move is part of a larger turnaround plan, led by new CEO Paula Schneider, who took over the company at the beginning of the year.
Thus far America Apparel has avoided bankruptcy through cash infusions, and amended its $50 million line of credit in March. The company's largest stake holder, Standard General, intends to buy the outstanding commitments under its credit line.
Standard General is no stranger to rescue packages, as it helped bankrupted RadioShack earlier this year.
American Apparel has posted losses for the past five years as it deals with executive issues, including the firing of former CEO Dov Charney in June 2014 for allegations of misconduct.
-See this Nasdaq article
American Apparel to close stores, cut jobs
American Apparel sues former CEO Charney
Former American Apparel employee suing for 'mismanagement'
New American Apparel CEO puts focus on order, discipline
American Apparel delaying supplier payments