American Apparel Finance Deal Good News For Dov Charney's Hipster Label: Federal Lawsuit Is Not
Updated after the jump with info on the employee involved in the lawsuit. Originally posted at 4:11 p.m.
American Apparel is in much better shape financially today after one of its major lenders agreed to revise the terms of its loan to the hipster clothier.
The agreement with lender Lion Capital puts the company on a clear road to recovery, a spokesman said. "American Apparel has experienced several bumps in the road in the past six months but I firmly believe that they are three-quarters of the way through those issues and I think the balance of the issues will all be favorably resolved this year," said company attorney Peter Schey.
Schey added that many of the company's financial problems had been overblown by the media. Asked about headlines like New York magazine's, which states, "American Apparel Saved From Bankruptcy," Schey said the company was never on the brink.
"That's overly dramatic way of portraying the situation as a cliffhanger when I don't think it was a cliffhanger," he told the Weekly. "I just think that the media reports have overstated the gravity of the company's position and prematurely predicting that it was heading for bankruptcy at a time when no one in the company was thinking about or planning on getting to bankruptcy."
In the past, American Apparel has acknowledged that it had "substantial doubt the company will be able to continue as a going concern."
The company missed a deadline in June to file New York Stock Exchange financial data, initially setting off a warning from the stock exchange that the company could be delisted. Schey said he has no doubt that American Apparel will meet the stock exchange's new deadline of mid-November to submit the material.
But not all news about the company is good.
The federal Equal Employment Opportunity Commission has filed a lawsuit on behalf of an unnamed worker who was allegedly fired after returning from medical leave for chemotherapy.
The company fired as many as 1,800 workers last year after it couldn't provide proof they were in the country legally. It's not clear if the employee's termination was connected to those firings.
Schey told the Weekly, "We have just received a copy of the complaint. We're reviewing it. The company has a strong commitment to complete and thorough compliance with the Americans with Disabilities Act."
Update: Schey released a statement late Tuesday that indicates the federal complaint involves "an employee who four years ago was terminated after being absent for medical treatment for cancer."
He maintained that the company "fully supports the landmark Americans With Disabilities Act and its purpose to provide comprehensive civil rights protections for individuals with disabilities."
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