American Apparel is preparing to auction off its assets

American Apparel is preparing to auction off its assets

Teen fashion retailer American Apparel is understood to be closing nine of its poorly performing stores by the end of the month. 

Staff have been informed of the store closures, which will include its outlets in Georgetown and Tribeca, according to the Wall Street Journal. The move comes as the company prepares for a planned auction of its 90 remaining stores. 

In a filing with the US Bankruptcy Court in Wilmington, Delware, restructuring adviser Joseph D'Ascoli said the nine stores are set to close as a result of them potentially being left behind by any retail purchaser. 

Earlier this week, American Apparel told nearly 3,500 employees in Southern California they may lose their jobs depending on the outcome of its sale to Gildan Activewear.

Canadian manufacturer Gildan Activewear is hoping to acquire the American Apparel brand in a deal worth around US$66m, which was struck after the troubled US retailer last month filed for Chapter 11 bankruptcy protection for the second time in just over a year.

Gildan has entered into an asset purchase agreement, but will not be purchasing any retail stores.

Gildan Activewear to buy bankrupt American Apparel for $66m