Did you read the 8K. 60 mil in default debt. Interest rate increased to 14% (for a corporation!). They even mentioned the B word.
Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement.
(a)
On November 6, 2014, Joe’s Jeans Inc.’s (“we” or the “Company”) received a notice of default and demand for payment of default
interest (the “Letter”) from Garrison Loan Agency Service LLC, as term loan agent (the “Agent”), under the term loan credit agreement entered
into on September 30, 2013 (the “Term Loan Agreement”). In the Letter, the Agent provided notice that certain defaults and events of default
under the Term Loan Agreement have occurred as a result of the failure of the Company to meet an EBITDA financial covenant for the twelve
month period ended September 30, 2014. As a result of such default, the Agent reserved its rights to exercise any and all remedies available to
it under the Term Loan Agreement and demanded payment of interest at the default rate of interest. As of September 30, 2014, there was
$59,925,500.00 outstanding under the Term Loan Agreement. The default rate increases the current interest rate of 12 percent by two percent
to 14 percent.
As a result of the default under the Term Loan Agreement, the Company is also in default under the terms of its revolving credit
agreement and its factoring facility with CIT Commercial Services, Inc. (“CIT”) each entered into on September 30, 2013. As of
September 30, 2014, we had $33,931,000 outstanding and $13,733,000 of availability under the revolving credit agreement, which includes the
Company’s factoring facility. We have not received any written notice from CIT that it intends to exercise any of the remedies available to it
under the revolving credit agreement or the factoring facility in connection with the events of default.
We are currently in discussions with the Agent and CIT regarding a resolution to the defaults, including amendments to the existing
agreements and waivers for the defaults. There can be no assurance that that the requested relief will be granted on terms acceptable to us or at
all. Unless the Company is able to secure a waiver, the Agent and CIT under the Term Loan Agreement, revolving credit agreement and
factoring facility are entitled to, among other things, accelerate the outstanding amounts under those agreement. Any such acceleration under
our credit facilities would have a material adverse effect on our liquidity, financial condition and results of operations, and could cause us to
become bankrupt or insolvent, if not resolved.
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