05/10/2010 22:02 BST | Updated 22/05/2015 10:12 BST

American Apparel Saved From Bankruptcy

American Apparel storefront

An American Apparel storefront in West Hollywood, Calif. Photo: AFP/Getty Images

Break out those unitards and do a happy dance - American Apparel has been saved from bankruptcy!

In August it was widely reported that the spandex-loving retailer was more than $91 million in debt (about £57 million) and facing the very real possibility that its 280 stores would be shuttered within the next few months.

Now, however, Lion Capital has changed the terms of its lending policy so that American Apparel can stay in the game, reports WWD.

According to the terms of the new agreement, American Apparel must make a pre-tax profit of $20 million (about £13 million) over the 12 months ending 31 January, and must earn $80 million (about £50 million) by September 2013. And that may be no easy task.

"Retail is hard right now," American Apparel's controversial CEO Dov Charney told WWD. "I'm not alone in this. You have to work for every dollar, you have to work on the merchandise, make sure the product mix is perfect and the allocation is right. It's a tough market right now."

That's where Lion Capital comes in.

"We are working together with Dov to realign the capital structure of American Apparel to support a number of key initiatives within the business, including the hiring of several new senior executives," Lyndon Lea, founder and partner of Lion, told the paper.

As for who those senior execs might be, Charney coyly told WWD, "If we hire a new C-level executive, I will let you know."