'Confidential' memo shows Deutsche Bank admitting its screwup was the reason American Apparel employees didn't get paid last week

Paula Schneider

American Apparel

Deutsche Bank has admitted it screwed up on January 7 by failing to process the US staff payroll for American Apparel, resulting in a huge number of the chain's employees not getting paid until the following week. A copy of the memo was obtained by Business Insider.

The January 12 Deutsche Bank memo marked "confidential" says the payroll wasn't processed for five more days due to "human error." It was written by Deutsche Bank directors Kathleen Yaccarino and Mark Leydon, both based in New York. It says: 

On Thursday, January 7, 2016, ADP transmitted a file to Deutsche Bank Trust Company Americas (DBTCA) for settlement on January 8th, 2016. The file was not processed, on January 7th for settlement on January 8th, due to human error at DBTCA. Instead, DBTCA processed the filed received by ADP for settlement on January 11th.

The error meant that American Apparel employees who thought they were going to be paid at the end of last week went through the weekend without their pay. The incident caused a minor freakout because American Apparel is currently going through a bankruptcy reorganisation, its sales are in decline, and its current cash position has not been disclosed since October 31, when it had $21 million in the bank, mostly from debt financing.

A separate memo obtained by Business Insider, addressed to American Apparel employees from payroll processor ADP, blames "a processing error with our supporting bank that led to a delay of your direct deposit for check date January 8, 2016." That memo, written by Yervant Manavian, vp/US money movement operations, promises that any employee who found themselves out of pocket due to the delayed payments would be made whole.

Here is the Deutsche Bank memo:

Deutsche Bank

American Apparel

And here is the one from ADP:

ADP

American Apparel

American Apparel has not yet responded to requests for comment.

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