Dov Charney Ousted From American Apparel

Retail Giant's Montreal-Born Boss Hit by Sex-Harass Claims

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By Reuters

Published June 19, 2014.
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Clothing and accessories retailer American Apparel Inc ousted its controversial founder Dov Charney as chairman effective immediately and moved to fire him as CEO and president following an ongoing investigation into alleged misconduct.

Charney, who has been repeatedly targeted in sexual harassment lawsuits, will be terminated for cause after a contractual 30-day cure period, the Los Angeles-based company said in a statement late on Wednesday.

The company, known for its racy advertising and bright “Made-In-America” clothes, said it named CFO John Luttrell as interim chief executive as it works with a search firm to look for a permanent CEO. The retailer also appointed Allan Mayer and David Danziger as co-chairmen.

“We take no joy in this, but the board felt it was the right thing to do,” Mayer said in a statement.

Charney, 45, who founded American Apparel’s predecessor companies in 1989, has been at the helm since 2007 when the company went public.

American Apparel spokesman Terry Fahn declined to provide additional details. Charney did not immediately respond to calls and emails seeking comment.

In 2011, a former employee had accused Charney of keeping her as a teenage sex slave, amid fear she might otherwise lose her job. She also sued American Apparel and its directors for failing to stop Charney from acting as a “sexual predator.”

The company, which is struggling with weak sales and heavy debt, said the management changes may have triggered a default under its credit agreements, adding that it will be in discussions with its lenders for a waiver of the default.

In February the company had tapped restructuring advisers after it had reached $240 million in debt and had come close to breaching loan covenants, debt terms designed to protect its lenders, according a media report.

The company’s shares, which have lost more than two-thirds of their value over the past year, closed at 64 cents on the American Stock Exchange on Wednesday


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