Page 9 of 17 SEC Filing
SCHEDULE 13D
| CUSIP No. N/A | Page 9 of 17 Pages |
Item 4. Purpose of Transaction.
As described in the Quarterly Report on Form 10-Q filed by the Issuer on February 1, 2016, on October 5, 2015, American Apparel, Inc. (“AA Inc.”) and its affiliated co-debtors (together with AA Inc., the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code thereby commencing Case No. 15-12055 (BLS) with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). On January 27, 2016, the Bankruptcy Court entered an order (the “Confirmation Order”), confirming the Debtors’ Joint Plan of Reorganization (the “Plan”) pursuant to which, (i) AA Inc. was converted into a Delaware limited liability company, American Apparel, LLC and (ii) the Issuer issued Units representing limited liability company interests in the Issuer to certain holders of claims against the Debtors. A copy of the Plan is attached as Exhibit 99.2 to the Current Report on Form 8-K filed by the Issuer on January 15, 2016. The Reporting Persons were holders of Prepetition Note Secured Claims (as defined in the Plan), and as such, upon consummation of the Plan on February 5,2015 (the Effective Date”), the Reporting Persons received 16.4% of the Units issued as of the Effective Date under the Plan (including the Units issued in connection with the $10 million equity contribution that was made pursuant to the Equity Commitment Agreement (as defined in the Plan) and the right to appoint one member to the board of directors of the Issuer (the “Board”) as further described in the Plan. The Reporting Persons have initially appointed Luke Corning to the Board pursuant to such board appointment right.
Except as set forth herein, the Reporting Persons have no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a) – (j) of Item 4 of Schedule 13D. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, the Issuer’s financial position and strategic direction, actions taken by the Board of the Issuer, price levels of the Units, other investment opportunities available to the Reporting Persons, conditions in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, purchasing additional Units, other securities or derivative instruments related thereto or selling some or all of their Units, other securities or derivative instruments, engaging in hedging or similar transactions with respect to the Units, and, alone or with others, pursuing discussions with the management, the Board of the Issuer, other holders of Units of the Issuer and third parties with regard to their investment in the Issuer, and/or otherwise changing their intention with respect to any and all matters referred to in Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
| (a) | – (b) The percentages of Units reported herein are based upon the 9,597,195 Units outstanding as of the Effective Date, as set forth in the Limited Liability Company Operating Agreement of the Issuer dated February 5, 2016. |
Each Reporting Person’s beneficial ownership of Units on the date of this Schedule 13D is reflected on that Reporting Person’s cover page.
By virtue of his position with Pentwater Capital, Mr. Halbower has the sole power to vote the Units owned by the Reporting Persons. Subject to restrictions, Mr. Halbower has the sole power to dispose of the Units owned by the Reporting Persons. No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Units.
Neither Pentwater, nor Mr. Halbower directly owns any of the Units. By reason of the provisions of Rule 13d-3 of the Act, each may be deemed to beneficially own the Units beneficially owned by the Pentwater Funds. However, none of the foregoing should be construed in and of itself as an admission by Pentwater, Mr. Halbower or by any Reporting Person as to beneficial ownership of Units owned by another Reporting Person. In addition, each of Pentwater and Mr. Halbower expressly disclaims beneficial ownership of the Units owned by each of the Pentwater Funds.
| (c) | Other than as reported in Item 4, the Reporting Persons have not effected any transactions in the Units during the past 60 days. |
| (d) | No person other than the Reporting Persons is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Units reported herein. |
| (e) | Not applicable. |
