American Apparel in talks with Lion Capital as $10m loan due

Last month American Apparel fired its founder and CEO Dov Charney (Source: Getty Images)
The battle over the future of American Apparel reached a critical point at the weekend as talks were held over the $10m (£5.8m) loan the troubled fashion retailer owed to the British private equity firm Lion Capital, that was due last Friday.

If a deal is not done then American Apparel would find itself in deeper trouble, as a default on the Lion Capital loan would trigger a further more significant default on a larger $50m loan the LA-based fashion retailer has with the large American bank, Capital One.

The continuing crisis was triggered by the firing last month by American Apparel of its founder and CEO Dov Charney, over alleged sexual misconduct and financial mismanagement, with Charney fighting back to try and reclaim his position in recent weeks.

Lion Capital has been in talks to seek a solution over the weekend with Standard General, a US-based hedge fund that has become a major player in the crisis after it began working with Charney in a deal to build up his stock holding. The hedge fund now has a 43 per cent per cent stake in American Apparel as a result.

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