After extending their deadline twice, American Apparel was granted a third extension to show compliance with a loan from Lion Capital, a London based investment firm. They now have until Thursday to show that their earnings in the past year are at least $20 million dollars as stated in their loan agreement with Lion Capital or they might be sent to bankruptcy court. One of America's most popular brands, American Apparel has been struggling financially as many other brands have as well due to the economy. Lion Capital loaned $80 million dollars to American Apparel in 2009 to help them pay back a $51 million dollar loan from Dell. According to WWD, "The Company is discussing possible amendments to the Lion credit agreement to address its compliance with the specified covenant…However, the company can provide no assurance that it will be able to secure such amendments." According to the New York Post, the company claims the financial woes arose from the federal government's demands to fire over a third of their employees. "The reduction in manufacturing efficiency was principally a result of the forced termination of over 1,500 experienced manufacturing employees in the third and fourth quarters of 2009 following the completion of the previously-disclosed I-9 inspection by US Immigration and Customs Enforcement," said a spokesman for American Apparel in a statement last week. One of the biggest problems is that American Apparel is understaffed and their output is less efficient as a result. Let's keep our fingers crossed that this widely favored brand overcomes this obstacle quickly and smoothly. Share this on Facebook Tweet This! Share this on del.icio.us Digg this! Stumble upon something good? Share it on StumbleUpon Share this on FriendFeed Share this on Reddit Post on Google Buzz Subscribe to the comments for this post? Share this on LinkedIn
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