American Apparel Inc. founder Dov Charney may start a new clothing business after a bankruptcy judge eliminated his best chance to regain control of the company he started in college. 

The judge on Monday approved a reorganization that hands the company to senior lenders, shutting out Charney’s alternative proposal. The lenders, including Monarch Alternative Capital LP, will trade their debt for control of the retailer, reducing its liabilities by about $200 million. American Apparel’s woes reflect broader challenges in the retail industry. 

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