LOS ANGELES, Jan. 26 (UPI) -- A U.S. bankruptcy judge approved a Chapter 11 reorganization plan for American Apparel, dashing the last best chance for founder Dov Charney to retake control.
Judge Brendan L. Shannon of the Bankruptcy Court in Delaware approved a plan that will take the Los Angeles-based company private under a group of lenders, including Monarch Alternative Capital, Coliseum Capital and Goldman Sachs Asset Management.
Last week, Charney -- fired in 2014 following sexual misconduct allegations -- and a group of supporters offered a buyout of $300 million. American Apparel CEO Paula Schneider lauded the court's move as "a new day for the company, and a positive outcome for our customers, vendors and employees."
"With this milestone behind us, we are now fully focused on executing our turnaround strategy as we continue working to drive revenue across our wholesale, retail and e-commerce businesses," she said.
With the reorganization plan approved, the company can now close underperforming stores and focus on rebuilding its brand.
Charney said he does not plan to appeal the court's ruling. Instead, he may start a new clothing business to compete with American Apparel with the help of financial supporters. Charney said American Apparel leadership took the company down a "road to ruin."
"Part of me can scarcely believe that a court could confirm their plan as feasible given the operating performance of the business under their management," he said in a statement. "Stay tuned."