"As of December 31, 2010, American Apparel has substantial indebtedness, including $57.2 million of borrowings under our revolving credit facilities and $81.2 million of borrowings under our facility with Lion [Capital]." And Lion Capital, which saved A.A. with an $83 million investment a couple of years ago, has just resigned its seats on the A.A. board. Dov Charney tells the NY Post that Lion is "in a better position to be our financial partner off the board than on the board," but few investors would interpret that as a positive sign.
Under the "Legal Proceedings" section of A.A.'s latest report, we count 13 lawsuits currently ongoing against the company, as well as subpoenas related to FBI and SEC investigations, and "other employment-related claims and other matters incidental to our business."
And the real bad news: the company reports that it lost $86 million in 2010. It has well under $10 million in cash. And if Dov Charney doesn't somehow come up with a big bucket of new cash in the very new future, bankruptcy is all but inevitable.