There’s a run on Spandex in America’s hipster enclaves today as The New York Times reports that American Apparel has filed for bankruptcy. But don’t start stockpiling emergency leggings rations just yet: No layoffs have been announced in connection with the bankruptcy, and all 130 American Apparel stores in the U.S., as well as its overseas operations and the company’s manufacturing center in Los Angeles, are expected to stay open. Instead, the brunt of the bankruptcy will be borne by the company’s stockholders, whose shares will be rendered essentially worthless as American Apparel is taken over by its creditors, including the same hedge fund attempting to make Radio Shack profitable again.
The bankruptcy has come amid dramatically falling sales, rising debts, labor disputes, and completely unsurprising allegations that founder Dov Charney is a big old creep. Charney, who has been the subject of multiple sexual-harassment lawsuits over the years, was unceremoniously ousted from his position as CEO last June, when The Chicago Tribune reported that he had been accused of misusing company funds and disseminating nude photos of an ex-employee. Since then, he’s filed a $100 million lawsuit against the company for pushing him out, a lawsuit that will be put on hold while American Apparel restructures. Charney stands to lose $8.2 million as a result of today’s filing, revealing the silver-lamé lining to this sad-eyed, splay-legged cloud.