RPR&C In The Media


New York Post – American Apparel delaying payments to suppliers – Quote by Jerry Reisman

December 31, 2014 Posted in: RPR&C In The Media, Uncategorized

New York Post

December 31, 2014

American Apparel delaying payments to suppliers


By James Covert

American Apparel is having trouble paying its bills on time.

The tattered retail chain has been delaying payments to key suppliers by as much as 60 days as it scrambles to avoid a cash crunch following a lackluster holiday season, sources told The Post.

Vendors for the yarn and fabric that the retailer needs to churn out its hipster fashions are being turned away by some of the so-called “factoring” companies that finance shipments to its California factories, insiders said.

While the situation hasn’t yet reached a crisis point, factoring firms are getting increasingly nervous about American Apparel’s liquidity, says Jerome Reisman, a partner at Reisman Peirez Reisman Capobianco, a law firm whose clients include factors.

“They keep reducing the amount of availability to manufacturers and vendors to American Apparel,” Reisman said of the factoring firms. “They don’t want to take the receivables because American Apparel’s not paying their bills [on time].”

Some fabric suppliers and other vendors are getting paid 60 days late, Reisman said.

American Apparel’s “liquidity is better than it has been in a very long time,” a company spokesman said in a statement.

A recent holiday sales promotion is “on track,” the spokesman added.

American Apparel “has had great feedback from its vendors over the past two months about the progress it has made improving the accounts payable function and they expect continued improvements in the weeks and months to come,” the spokesman noted.

American Apparel has cut costs aggressively this year, and the company looks on track to meet its goal to generate between $40 million and $45 million in Ebitda, or earnings before interest, taxes, depreciation and amortization, some insiders noted.

Nevertheless, operations have been weighed down by one-time restructuring costs and charges — most notably legal bills related to the suspension and ouster of founder Dov Charney from the CEO spot, which was finalized Dec. 16.

“Liquidity is a little tight,” according to one source briefed on the situation. “It’s tight primarily because they wasted $10 million fighting with the guy they ultimately fired.”

An American Apparel spokesman didn’t immediately comment on how much the company has spent on Charney’s ouster.

American Apparel shares traded lower Wednesday morning in the wake The Post’s exclusive story, falling 3.7 percent to $1.03.