With its stock trading in $0.11, and ongoing battles with former CEO Dov Charney, American Apparel has filed for Chapter 11. The action was prepacked and included some of its debt holders. Now, the retailer has to show it can survive in any form, with customers going elsewhere to buy competitive products. The holiday season may be the determination of its fate.

The company announced:

American Apparel, Inc., (the Company) (NYSE MKT: APP), a vertically-integrated manufacturer, distributor, and retailer of branded fashion-basic apparel, announced today that it has reached a restructuring support agreement with 95% of its secured lenders to implement a pre-arranged financial restructuring. This reorganization will enable the Company to implement a comprehensive transformation strategy to revitalize the business and brand, while keeping its production and operations in the U.S. Throughout the implementation of this process, American Apparel will continue to operate its business without interruption to customers, employees and vendors.

Also:

The restructuring support agreement, which has been approved by the Company’s board of directors, will substantially reduce the Company’s debt and interest payments through the elimination of over $200 million of its bonds in exchange for equity interests in the reorganized Company, and provide the Company with access to financing during and after its restructuring. As part of this agreement, American Apparel, and certain of its domestic subsidiaries have voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Company expects to complete the restructuring within approximately six months

And:

Under the restructuring support agreement, American Apparel’s secured lenders will provide approximately $90 million in debtor-in-possession (DIP) financing. These supporting creditors have committed $70 million of new capital to support the reorganization and recapitalization of the business. The Company anticipates that such financing will be more than sufficient to fund its ongoing operations and pave the way for a successful reorganization. As a result of the reorganization, American Apparel’s debt will be reduced from $300 million to no more than $135 million, and annual interest expense will decrease by $20 million.

American Apparel hopes to keep just over 100 stores open.

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