American Apparel sues over 250,000 pounds of raw fabric

Los Angeles retailer American Apparel is now in a legal battle against another company they worked with in the past. After having a tiff with vendor iTek Services Inc. for not receiving scanners, the company is now suing textile firm Tri-Star Dyeing and Finish Inc. currently in order to receive their raw fabric back.

The fabric consists of 250,000 pounds and is currently under the property of the company. The textile firm has refused to return the retailer’s fabric back, which is now being settled in court. American Apparel has requested in Delaware Bankruptcy Court for the fabric to be returned immediately, and also for the company to stop requesting old debts from before American Apparel’s bankruptcy filing.

American Apparel sues company for fabric

The Los Angeles-based retailer needs the raw fabric in order to move forward with its highest bidder. Gildan Activewear, which has aimed to buy parts of the company, would like American Apparel’s assets and intellectual property. The fabric in question is part of what the company would need in order to keep the terms of the agreement. As Gildan is prepraing to buy American Apparel for 66 million dollars, the basics apparel brand needs its fabric in order to keep this deal in order.

If American Apparel doesn’t receive its fabric back, the replacement cost is approximately 500,000 dollars. So far, it seems that Tri-Star has sent back a reasonable amount of dyeing some of the raw materials, but not everything that was requested. According to WWD, American Apparel still currently owes the company 100,000 dollars in invoices, which was prior to the company’s second bankruptcy filing.

The fashion company has an outstanding balance for their vendor iTek Services, which had a similar solution to the problem. Like Tri-Star, iTek withheld its scanners because of an unpaid bill. This largely disrupted the company’s flow of business as the holiday season has been fast approaching. The withholding of scanners caused approximately 25 percent of its workers to lose working hours. Similarly, if American doesn’t receive its fabric back soon, it will likely deal with an unpleasant aftermath.

Photo: American Apparel