Can the man responsible for American Apparel’s rise and rapid fall turn around its fortune? Someone seems to think so.
American Apparel filed for Chapter 11 in October and is set to emerge from bankruptcy later this month. As part of a restructuring deal reached with 95 percent of its secured lenders, the Los Angeles-based company will give itself to its largest bondholders in a debt-for-equity exchange that will leave existing shareholders with nothing.
Charney’s proposal, however, could thwart proceedings if the bankruptcy court thinks it would offer more money to unsecured creditors.
Charney, who founded American Apparel in 1989 with a $10,000 loan from his father, was fired from his position as chief executive in June 2014 following a series of sexual harassment claims made by past employees. He served as a consultant until December 2014 when he was dismissed for “cause.” Since then, he has unleashed a stream of lawsuits against the company, including defamation.
Last month, he announced that he had enlisted Cardinal Advisors LLC to evaluate investors to help buy the company out of bankruptcy and put him back in a senior role. In a statement sent to the Los Angeles Times, American Apparel said it “evaluates all bids consistently” and is focused on completing its financial restructuring at the end of this month.
Best known for its provocative ads, the clothing chain was worth nearly $1 billion at its peak in late 2007, but has not turned a profit since 2009 and sales continue to slide. The company lost $65 million on sales of $385 million in the nine months ended Sept. 30.