Dov Charney, the former CEO of American Apparel, is still trying to get back into the company he founded. With the backing of private equity firms Hagan Capital Group and Silver Creek Capital Partners, Charney has served up a $300 million buyout offer to American Apparel, which filed for bankruptcy in October after months of plunging sales and legal issues.
Charney, who was booted from American Apparel in late 2014 after allegations of sexual harassment, had been in talks with investors since at least December, according to Bloomberg; news of the proposal first surfaced last week. To shield American Apparel from bankruptcy, they would have to ink a deal with the company before January 20, when it will finalize the terms of its bankruptcy plan.
The investors behind the offer are in support of Charney’s return to the company, citing the fact that American Apparel has sunk even lower since his departure.
“Dov’s creativity, entrepreneurialism, and dedication are the cornerstone of American Apparel,” Chad Hagan, the managing partner of Hagan Capital Group, said in a statement. “Removing him from the company’s board and leadership was a shortsighted mistake, and we are seeing the results of this error unfold in the declining performance of the company today.”
That statement ignores the fact that Charney’s actions helped cement the company’s fate: Even after Charney’s exit, American Apparel was saddled with a host of legal fees and financial obligations brought on by the many sexual harassment allegations against the former CEO. According to the bankruptcy filing, Charney’s many transgressions cost American Apparel upwards of $7 million.
Immediately after Charney’s ousting, American Apparel had contemplated a bid from private equity firm Irving Place Capital, but the two parties never came to an agreement.
UPDATE: In a statement, an American Apparel spokesperson told Fast Company the following:
“American Apparel evaluates all bids consistently, and in the ordinary course. The company remains focused on pursuing the completion of its financial restructuring following its planned bankruptcy court hearing at the end of this month.”
American Apparel also announced yesterday that its reorganization plan had been approved by the company’s debt holders.
[via The Guardian]