Now it may appear that we slept on this but we’ve been biding our time to see how the drama unfolds and my god is it getting juicy…Ahem.

Retail Giant and serial blog-botherer American Apparel are in trouble.

2010 sees the brand on the verge of drowning in their own debt and their reputation has been marred by a far reaching and highly influential campaign orchestrated by the online tabloid giant Jezebel.com

Shares in the Company have plummeted from $16 to around $1.63 more than likely to induce a Share Sell bonanza amongst it’s shareholders inevitably devaluing the brand entirely. This comes as no surprise to the growing number of people on Wall Street who have been questioning Dov Charney’s leadership of the company commenting that there had to be some form of serious tight assed business types to compliment Dov’s volatile and unpredictable behaviour, oh the travesty.

“The total debt increased by $8.0 million, to $91.4 million at March 31, 2010. As of March 31, 2010, total assets were $324.9 million, total liabilities were $180.7 million, and total stockholders’ equity was $144.2 million.”

And you thought your balance sheet looked bad.

Sources close to the company said they expected AA and it’s main cash teet, British based private equity firm Lion Capital, to reach a settlement that will veer the runaway train that is the American Apparel of the now from an impending debt covenant breach…Now of course Lion Capital have no comment on these speculations from AA insiders saying that their policy does not enable them to comment on it’s portfolio companies. This being the second time it seems that Lion Capital just have to let it slide, anyway whats $80 million between friends?

Back over the pond Dov and his neon clad army have demonstrated similar discretion by refusing to file their financial reports, a move that has angered the NYSE who are considering de-listing the brand entirely.

Remarkably sales have actually doubled for the brand with a large expansion program (i’m sure you have at least 1 AA in your town…for some reason), Men’s trend analyst Tim Bess of The Doneger Group commenting that American Apparel should be well positioned for A/W 2010 and S/S 2011 with it’s recent switch to a more demure minimalist outlook for even the more core/trademark items.

I Guess what it boils down to and what many speculate Lion Capital enforcing is to bust Dov Charney back to a creative role, hide the chequebooks change the pin code move location and change telephone numbers sit him in a room with felt tips and some paper, maybe a few pre-pubescent females just to keep him ticking and bringing in a more business minded soul.

We are watching this fiasco intensely and will update accordingly.