American Apparel acknowledging that bankruptcy is not out of the question.

Teen apparel companies have been competing in a fast fashion environment for years.  Today a number of those companies find themselves struggling to keep up with the low price chains of Forever 21 and H&M.  These companies have either considered or actually filed bankruptcy.

For example, Wet Seal filed bankruptcy in January.  Now, in filings with the Securities and Exchange Commission, the Los Angeles Times reports that the Los Angeles based American Apparel is warning that they do not expect to have the money to run the company over the next 12 months.  American Apparel has been losing money over the last five years.  According to the New York Post, “A Chapter 11 filing is not out of the question, the company all but acknowledged in a regulatory filing.”

Bankruptcy might be their only option as they are having problems with their creditors, more specifically Capital One.  The New York Post states that American Apparel’s shares have dropped 76 percent over the past year to 21 cents.  In the last quarter the company had a loss of about 19.4 million.  To make matters worse, the founder and previous CEO is filing lawsuits against the American Apparel.  Additionally, there is said to be some labor unrest related to the firing for apparently organizing their co-workers and union against the company.