American Apparel's latest woes don't involve controversial ads or vandalism, but plummeting stocks in the wake of broken loan agreements.
The retail chain's stocks fell more than 40 percent this week after the announcement they'd broken the loan agreement with Lion Capital. Made in March of last year, the deal held American Apparel to keep their debt below a certain level relative to adjusted earnings -- banks design such ratios to make demands on the borrowers (no free rides here!) before they are unable to pay back debt.
Significant losses during the first quarter, as well as some other financial woes apparently present some serious problems for American Apparel. WWD reports that the chain has even outlined a worst-case-scenario in which the company would no longer viably maintain operations. After recent turbulent press over some vandalism involving "retail terrorists" here in New York, the chain is probably wishing for good press at this point.