Dov Charney may be back at American Apparel
If you typically feel as though you need to shower whenever a discussion about former American Apparel CEO Dov Charney comes up, now might be a good time to reach for your bodywash and a towel.
Mr. Charney (he of sexual harassment suits and prancing around the office in his underwear, etc.) was recently fired for cause by the American Apparel’s board. While many outside the company wondered why it took the board so long to conclude that Mr. Charney had to go, others continue to support him. Mr. Charney himself has railed against what he sees as an illegal dismissal from the company and has steadily been at work trying to engineer a return.
For those without a scorecard, here’s how the American Apparel saga has played out so far.
- After his removal, Mr. Charney began a public back and forth with the board via the media.
- Lion Capital, which had extended a loan to American Apparel, demanded immediate payment of $10 million from the company. The action was triggered by a clause in the contract that called for immediate repayment if Mr. Charney was no longer with American Apparel.
- Standard General, a hedge fund with a roughly 10 percent stake in American Apparel, offered its stock to Mr. Carney to help him regain control of the company. Mr. Charney and Standard General together own about 44 percent of the company’s shares.
- Unable to move the board, Mr. Charney turned over his stock to Standard General, giving the firm control of his voting rights.
- Standard General has negotiated with American Apparel’s board with the result that three members will lose their seats, the positions to be filled with one person from the hedge fund as well as two others of its choosing.
- No word has been given on whether Mr. Charney will be back with American Apparel as CEO, but signs certainly point to that as a possibility. A Los Angeles Times report has Mr. Charney returning to American Apparel, at least for now, as a strategic consultant.
One of the key aspects of the negotiations is that American Apparel will continue to make its clothes in the U.S. The chain, which promotes its sweatshop-free clothing, has always used its "Made in the USA" positioning as a differentiator in the marketplace.
- American Apparel Strikes Rescue Deal With Investor – Bloomberg News
- American Apparel deal keeps Dov Charney on as consultant – for now – Los Angeles Times (tiered sub.)
- American Apparel CEO to fight firing – RetailWire
How do you think the drama being played out between American Apparel’s board and former CEO Dov Charney is affecting the people who work for the company? What effect is it having on consumer attitudes to American Apparel?