The hip U.S retailer faces financial meltdown after revealing a staggering $120.3million (£77.2million) debt.
The future of the eccentric fashion empire, which has 15 UK stores, looks uncertain.
A spokesman for American Apparel told fashion trade title WWD that the firm may not survive the next 12 months, threatening the jobs of over 10,000 employees throughout 20 countries.
There are fears that unless sales across the retailer's 279 worldwide stores instantly improve, the company will breach the conditions of an $80m loan from Lion Capital which resuced the store from another financial crisis last year.
American Apparel's brazen Canadian founder Dov Charney, 41, recently told Business Week: "A lot of assumptions that I grew up with are no longer reality.
"Those were things that we could rely on: that lenders will always be there, that they'll behave ethnically and they'll always have money, that you can trust that as the sun comes up the consumer will be healthy, that we'll always be close to full employment in developed nations. Now there are no certainties."
In a bid to redeem its financial calamity, the retailer is migrating from the popular 'Hipster' style, in favour for a more "timeless", preppy aesthetic.
"The stereotype of a hipster is not something people aspire to anymore. Do you want to be a hipster? Nobody wants to be a hipster", Charney told the Village Voice.
He added that the revived look is "hard to put into words- it's about emphasising products that we have. Our pieces are timeless."
LONG LIVE AA
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