Lion Capital Said to Want Return of American Apparel CEO

Lion Capital LLP is threatening to call in a $10 million loan to American Apparel Inc. unless the retailer reinstates ousted Chief Executive Officer Dov Charney, according to a person familiar with the situation.

Barring an investigation that finds illegal or immoral activities by Charney, the hedge fund believes his return would be best for American Apparel because it would stabilize the chain in the short term, said the person, who asked not to be named because the matter isn’t public.