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American Apparel has filed for bankruptcy protection on October 5.

The Los Angeles-based clothing chain, which has been plagued by plunging sales, high debts and several management crises, said it had agreed a deal to restructure its finances.

The company has been involved in a drawn-out legal battle with its founder Dov Charney over misconduct claims.

American Apparel runs 260 shops and concessions in 19 countries.

The retailer, which has been trying to turn around its business, recorded a loss of $19.4 million in Q2 2015.

Photo American Apparel

Photo American Apparel

American Apparel CEO Paula Schneider said: “This restructuring will enable American Apparel to become a stronger, more vibrant company.”

Under the restructuring agreement, American Apparel’s secured lenders will provide about $90 million in financing, the company said.

It expects to cut its debt to $135 million from $300 million through the restructuring, with the program set to be completed within six months.

The company said it would continue to operate its retail stores, and its wholesale and US manufacturing operations throughout the process.

American Apparel, known for making its products in the US, has not turned a profit since 2009.

In August, the company flagged up problems with its finances, saying it might not have enough capital to keep operations going for the next 12 months as losses widened and cash flows turned negative.

American Apparel was founded in 1989 by Canadian Dov Charney. The company fired Dov Charney in December 2014 over misconduct claims, and in June it was granted a restraining order against him.

Rihanna says she will sue Topshop after claiming they sold T-shirts with her face on it without asking permission.

Rihanna’s team is said to have told the British high street clothing chain run by billionaire Sir Philip Green to stop selling them, and is reported to be asking for $5 million in compensation at the High Court.

The legal threat comes despite Rihanna having dined with Sir Philip Green and music mogul Simon Cowell while on her Christmas break to Barbados in 2010.

Rihanna, who last year signed a deal worth a rumored $1,250,000 to design a range with High Street rival River Island, tweeted about the Boxing Day meal they had together, saying: “Just had dinner w/ Simon Cowell Philip Green @ Sandy Lane! Great night!”

The singer has also spent time with Sir Philip Green’s daughter Chloe while holidaying at the same time in the Caribbean two years ago.

It was even rumored Rihanna, 25, might follow in the footsteps of Kate Moss and design a range for Topshop, but the two parties could now face each other in court.

Last year Topshop released a T-shirt featuring a picture of Rihanna from her We Found Love music video, which sold out quickly afterwards

Last year Topshop released a T-shirt featuring a picture of Rihanna from her We Found Love music video, which sold out quickly afterwards

Last year Topshop released a T-shirt featuring a picture of Rihanna from her We Found Love music video, which sold out quickly afterwards.

It is understood this is the garment at the centre of the row.

In Britain companies could argue that by buying the image from the photographer, they do not have to pay licensing fees to the star pictured.

A source close to Rihana said she was offered a small sum of cash and Topshop told her management “we do what we want”, according to Page Six.

“Rihanna’s management asked Topshop a number of times to stop selling her image,” the source said.

“What is most offensive for Rihanna is that they basically told her, <<Go to hell. We don’t care; we are going to continue selling you>>.

“Even though the UK laws don’t protect the artist, she has decided to move forward and sue Topshop. She has spent almost $1 million in litigation at this point. She says it’s the principle, and wants to make a statement about it. They are taking advantage of artists. It is just exploitation. What they are doing is wrong.”

Topshop is a British retail powerhouse which is trying to expand in America, setting up stores in New York.

A company source said: “This issue is related to a T-shirt provided to Topshop by a third party supplier.

“We have been informed that the claimants documents do not mention any specific level of financial damages so any numbers referenced are fictitious.”

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