American Apparel continues to be dragged through the mud following the firing of its controversial, and now former, leader, Dov Charney.
On Friday, the board of directors voted to replace Charney as chairman and terminate him as president and CEO for cause. The retailer's CFO John Luttrell will serve as interim CEO during the executive search. The board also appointed Allan Mayer and David Danziger as co-chairmen to replace Charney
"We take no joy in this, but the board felt it was the right thing to do," Mayer said. "Dov Charney created American Apparel, but the company has grown much larger than any one individual and we are confident that its greatest days are still ahead."
Charney has also created one of the biggest scandals in retail that includes accusations of sexual harassment, sordid behavior and misuse of company funds. Now he could be gearing up for a long legal battle, according to Women's Wear Daily.
"They pushed him out the door with their right hand and dragged [or attempted to drag] him back in with the left hand," a source told WWD. "Dov Charney is not going quietly into the night. There's going to be a lot more happening on Monday." Charney declined to comment when reached by WWD.
American Apparel, for its part, is trying to move past Charney and announced the hiring of advisory firm Peter J. Solomon to serve as financial and strategic advisors.
"We believe the hiring of a financial and strategic advisor at this important juncture is in the best interest of our stockholders and will help maximize long-term shareholder value," said Lutrell. "Although the company currently is on track to meet its previously disclosed 2014 EBITDA, we are pleased to be working with Peter J. Solomon to ensure that we have adequate access to capital in the future at a reasonable cost."
The retention of financial advisors helps fuel the idea that American Apparel could consider a sale of the company to private equity investors.
-See this American Apparel press release
-See this WWD story
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