US fashion chain American Apparel has filed for US bankruptcy protection.
The Los Angeles-based company, which runs 260 shops and concessions in 19 countries, said in a statement it had reached a restructuring deal with 95 per cent of its secured lenders to reduce its debts.
The firm added that the restructuring will take around six months, and its international stores will not be affected.
It has 18 stores and concessions in the UK including locations in London, Leeds, Glasgow, Manchester and Brighton.
American Apparel chief executive Paula Schneider said: “This restructuring will enable American Apparel to become a stronger, more vibrant company.”
She added that the move would allow the firm to “refocus our business efforts on the execution of our turnaround strategy.”
It said as a result of the deal lenders will write off about 200 million US dollars (£131 million) of bonds in exchange for equity in the company, reducing its 300 million US dollars (£198 million) debt to no more than 135 million US dollars (£89 million) and cutting annual interest payments by 20 million US dollars (£13 million).
In August, the company flagged up problems with its finances, saying it might not have enough cash to keep the firm going for the next 12 months as losses widened.
The cult fashion brand makes all of its garment in the US, and trades on its “Made in Downtown LA” reputation.
The business was founded by Canadian Dov Charney in 1989 who dropped out of college and borrowed 10,000 US dollars (£6,600) from his father to start the firm. The business first traded as a public company in 2007.
However, the firm fired Mr Charney in December over a series of misconduct claims made against him.
In June the business was granted a restraining order against Mr Charney, preventing him from making negative statements in the press about the company and from trying to get board members removed.