This is the letter American Apparel employees received about the company’s proposed acquisition by Gildan and its latest Chapter 11 filing. A copy of the letter was obtained by Fast Company.
In the letter, chairman Bradley Scher suggests that Gildan wants “to maintain certain of our manufacturing, distribution and warehouse operations in and around Los Angeles.” American Apparel employs thousands of employees in its main Los Angeles factory; “Made in America” is a cornerstone of the brand. What this latest development ends up meaning for those workers and their livelihoods has yet to play out in real life.
The letter also notes that the company is entering an auctioning process, enabled by the bankruptcy filing, that gives American Apparel the chance to sell off retail assets and perhaps find a higher bidder than Gildan (which isn’t purchasing retail store assets).
Here’s the letter:
The Board of Directors and senior management of American Apparel have reached an agreement to be acquired by global apparel holding company, Gildan Activewear Inc. (also known as “Gildan”). We are confident that this decision is the best strategic move forward, in order to preserve the legacy of the American Apparel brand.
Gildan is one of the largest domestic consumers of U.S. cotton, and is a leading manufacturer and marketer of quality branded basic family apparel, including T-shirts, fleece, sports shirts, underwear, socks, hosiery and shapewear. Gildan is also invested in U.S. manufacturing. They own and operate vertically-integrated, large-scale domestic manufacturing facilities, offices and distribution centers and employ over 2,500 people here in the U.S.
Recently, Gildan purchased Alstyle Apparel, which is based in Southern California, like American Apparel. As part of that deal, Gildan continues to employ people in Alstyle’s administrative offices and distribution center. Similarly, Gildan has asked for the opportunity to maintain certain of our manufacturing, distribution and warehouse operations in and around Los Angeles.
In order to provide for an orderly sale of the business, American Apparel filed voluntary Chapter 11 bankruptcy this morning. Although we have reached an agreement with Gildan, filing with the court allows us to hold an auction process, where other buyers who might propose a better deal than Gildan’s, can submit competing offers, including for the retail business. Ultimately, we will be able to get the best deal done, by requiring various other bidders to compete to buy our iconic, valuable brand.
The competitive sale process I have discussed above will take some time to complete. Throughout this process, the Company will run its business as usual in the U.S. This will have no noticeable effect on our day-to-day operations in the U.S.
I’m sure you have many questions about what this means for you. In the short-term, there is still work to be done. Everyone will continue to come to work, do their jobs and get paid on each payday. Wages, hours, and benefits will remain the same.
Later this week, you can expect a more detailed communication from Craig Simmons, our head of Human Resources, who will give you additional information and further updates. In the meantime, you may reach the Human Resources Department at any time with any questions you may have.
We will continue to update you as we move forward. As always, we thank you for your continued dedication. I know we all care deeply about the Company and want the best for American Apparel.
Chairman of the Board