LA-based clothing brand American Apparel confirmed the worst fears: the company has filed for bankruptcy under Chapter 11 of the US bankruptcy code. Decreasing sales and revenues within the last years – e.g. sales fell by 17% in the second quarter of 2015 compared with last year- are the reasons that have led to this dramatic business situation.

The filing has been announced simultaneously with a restructuring plan for the company that has been agreed with 95% of its lenders. Consequently, American Apparel will be able to further operate its retails stores, wholesale and US manufacturing operations without interruption. Besides, international stores will also not be affected at least for now.

As a result of the reorganization, the brand’s debt will be reduced from $300 million to no more than $135 million, and annual interest expense will decrease by $20 million. The supporting creditors have also committed to provide additional liquidity ($70 million) to carry out the restructuring plan, whose details still remain a mystery.

The restructuring plan is subject to the approval by the Bankruptcy Court for the District of Delaware, where American Apparel filed for bankruptcy.