DBGI Hit With Default Notice on $3.5M Convertible Note; Holder Threatens Suit
DBGI is trading near its 52-week low of $0.68 (7.4% above the low) on light trading volume (0.3× avg).
Summary
Digital Brands Group disclosed a default notice from Shakawe Capital on its $3.5M convertible note, with the holder demanding 120% of principal plus damages and threatening litigation. The company disputes parts of the claim and is seeking a consensual extension.
Key Events · Legal and Risk Events · DBGI
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Default Notice on $3.5M Note
Shakawe Capital sent a written notice of default on October 29, 2026 for the $3,529,412 unsecured convertible note issued July 23, 2026, citing a missed $1,000,000 payment due October 23 and a missed August 7 registration statement filing.
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120% Default Amount Demanded
The holder asserts the note is immediately due at 120% of outstanding principal plus accrued interest and other amounts, including liquidated damages under the Registration Rights Agreement, with 20% default interest on unpaid amounts.
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Discounted Default Conversion Terms
During default the holder may convert at the greater of 90% of the lowest closing price in the prior five trading days and the floor price, subject to beneficial ownership limits and the Nasdaq 19.99% cap.
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No Cure Period, Litigation Threatened
The notice states there is no cure period and the default is effective immediately; absent an acceptable extension proposal by end of day October 29, 2026, the holder intends to engage counsel and sue.
Analysis · DBGI · Trade & Services
Shakawe Capital has declared an immediate default on the $3,529,412 convertible note, claiming DBGI missed a $1,000,000 payment due October 23 and never filed a required registration statement by August 7. The holder is demanding 120% of principal plus interest and liquidated damages, with 20% default interest and a discounted default conversion price that converts at the greater of 90% of the lowest close in the prior five trading days and the floor price. No cure period applies, and the holder said it would hire counsel and sue unless it received an acceptable extension proposal by the end of October 29. For a company that already flagged going-concern doubt in its Q2 10-Q, an acceleration of this size threatens liquidity directly, and the discounted conversion feature adds share issuance risk on top of the existing $100M equity line. The company disputes some of the claims and is negotiating, but no resolution is assured.
How filings like this one have moved
In the 30 days to Nov 2, 2026, 49.5% of the 190 measured filings Wiseek scored 9 moved their stock by 5% or more by the next session's close. The median move was -0.29%. These are measured outcomes after filings of this importance, not a forecast for this one.
Measured one observation per ticker per day, after exclusions. Current figures: Filing Impact Tracker · open dataset
At the time of this filing, DBGI was trading at $0.73 on NASDAQ in the Trade & Services sector, with a market capitalization of approximately $658.1K. The 52-week trading range was $0.68 to $720.00. This filing was assessed with negative market sentiment and an importance score of 9 out of 10.