American Apparel confirms default notice
New York • American Apparel Inc. says it has received a notice from investment firm Lion Capital demanding payment of a $9.9 million loan, according to a regulatory filing Tuesday.
Lion Capital is claiming that Los Angeles-based casual clothing chain defaulted under its credit agreement since it ousted its founder and CEO Dov Charney last month.
American Apparel says in the documents that it is disputing the claim, contesting the validity of the acceleration and has advised Lion that a default can't occur before July 19.
American Apparel's revolving credit line from other lenders doesn't currently allow the repayment of the Lion Capital loans. But American Apparel says it is seeking approval from those lenders and expects it will be able to repay the loan if that approval is granted.