American Apparel Litigation Trustee Wants New Ch. 11 Tossed

Law360, Wilmington (December 9, 2016, 7:27 PM EST) -- A bankruptcy trustee for American Apparel LLC’s first Chapter 11 has asked a Delaware judge to shut down with prejudice the company’s second bankruptcy action, calling it an “egregious” and prohibited effort to avoid settlement payments required under the first plan.

In a filing with U.S. Bankruptcy Judge Brendan L. Shannon’s court late Thursday, the reorganized retailer’s litigation trustee said the new Chapter 11 overlaps and seeks impermissible changes in the prior, confirmed plan, and appears to have been filed in bad faith without a clear path to rehabilitation of the company.

The clothing retailer and manufacturer opened its second bankruptcy...

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