American Apparel has been looking for a buyer and has had talks with brand licensing firms Sequential Brands and Authentic Brands, as well as a financial company, B. Riley Financial.
It is the latest in a growing list of clothing brands that have gone under recently, including Aeropostale, Quiksilver, Wet Seal and Pacific Sunwear. Chains are struggling as consumers shun stores in favour of online shopping.
American Apparel filed its first bankruptcy in October 2015, following a steep drop in sales and a drawn-out legal battle with Mr Charney, who was ousted in 2014.
The retailer emerged from bankruptcy this year under the ownership of a group of former bondholders led by hedge fund Monarch Alternative Capital.
But it continued to face falling sales, exacerbated by its costly manufacturing plant in Los Angeles. Under mounting pressure, American Apparel hired investment bank Houlihan Lokey earlier this year to explore a sale.
The company has insisted that any sale must involve keeping its manufacturing plant in the US.